Correlation Between China BlueChemical and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both China BlueChemical 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 China BlueChemical and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and INDOFOOD AGRI RES, you can compare the effects of market volatilities on China BlueChemical 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 China BlueChemical with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and INDOFOOD AGRI.
Diversification Opportunities for China BlueChemical and INDOFOOD AGRI
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and INDOFOOD is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical 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 China BlueChemical 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 China BlueChemical 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 China BlueChemical i.e., China BlueChemical and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between China BlueChemical and INDOFOOD AGRI
Assuming the 90 days horizon China BlueChemical is expected to generate 1.27 times less return on investment than INDOFOOD AGRI. In addition to that, China BlueChemical is 1.48 times more volatile than INDOFOOD AGRI RES. It trades about 0.06 of its total potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.11 per unit of volatility. If you would invest 19.00 in INDOFOOD AGRI RES on August 28, 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 Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
China BlueChemical vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| China BlueChemical |
| INDOFOOD AGRI RES |
China BlueChemical and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and INDOFOOD AGRI
The main advantage of trading using opposite China BlueChemical and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical 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.| China BlueChemical vs. CONAGRA FOODS | China BlueChemical vs. Clean Energy Fuels | China BlueChemical vs. Lifeway Foods | China BlueChemical vs. Austevoll Seafood ASA |
| INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Microsoft | INDOFOOD AGRI vs. Microsoft |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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