Correlation Between FUYO GENERAL and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL and INDOFOOD AGRI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FUYO GENERAL and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUYO GENERAL LEASE and INDOFOOD AGRI RES, you can compare the effects of market volatilities on FUYO GENERAL and INDOFOOD AGRI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FUYO GENERAL with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and INDOFOOD AGRI.
Diversification Opportunities for FUYO GENERAL and INDOFOOD AGRI
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FUYO and INDOFOOD is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES and FUYO GENERAL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FUYO GENERAL LEASE are associated (or correlated) with INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between FUYO GENERAL and INDOFOOD AGRI
Assuming the 90 days horizon FUYO GENERAL LEASE is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, FUYO GENERAL LEASE is 1.27 times less risky than INDOFOOD AGRI. The stock trades about -0.01 of its potential returns per unit of risk. The INDOFOOD AGRI RES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19.00 in INDOFOOD AGRI RES on August 31, 2024 and sell it today you would earn a total of 3.00 from holding INDOFOOD AGRI RES or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
FUYO GENERAL LEASE vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| FUYO GENERAL LEASE |
| INDOFOOD AGRI RES |
FUYO GENERAL and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUYO GENERAL and INDOFOOD AGRI
The main advantage of trading using opposite FUYO GENERAL and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL position performs unexpectedly, INDOFOOD AGRI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| FUYO GENERAL vs. United Rentals | FUYO GENERAL vs. Superior Plus Corp | FUYO GENERAL vs. NMI Holdings | FUYO GENERAL vs. Origin Agritech |
| INDOFOOD AGRI vs. SIVERS SEMICONDUCTORS AB | INDOFOOD AGRI vs. Darden Restaurants | INDOFOOD AGRI vs. Reliance Steel Aluminum | INDOFOOD AGRI vs. Q2M Managementberatung AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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