Correlation Between Indorama Ventures and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both Indorama Ventures and COLUMBIA SPORTSWEAR 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 Indorama Ventures and COLUMBIA SPORTSWEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indorama Ventures PCL and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on Indorama Ventures and COLUMBIA SPORTSWEAR 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 Indorama Ventures with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Ventures and COLUMBIA SPORTSWEAR.
Diversification Opportunities for Indorama Ventures and COLUMBIA SPORTSWEAR
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indorama and COLUMBIA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Ventures PCL and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and Indorama Ventures 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 Indorama Ventures PCL are associated (or correlated) with COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of Indorama Ventures i.e., Indorama Ventures and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between Indorama Ventures and COLUMBIA SPORTSWEAR
Assuming the 90 days trading horizon Indorama Ventures PCL is expected to generate 3.94 times more return on investment than COLUMBIA SPORTSWEAR. However, Indorama Ventures is 3.94 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.12 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.04 per unit of risk. If you would invest 16.00 in Indorama Ventures PCL on September 4, 2024 and sell it today you would earn a total of 51.00 from holding Indorama Ventures PCL or generate 318.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indorama Ventures PCL vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| Indorama Ventures PCL |
| COLUMBIA SPORTSWEAR |
Indorama Ventures and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Ventures and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite Indorama Ventures and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Ventures position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| Indorama Ventures vs. COLUMBIA SPORTSWEAR | Indorama Ventures vs. Scandinavian Tobacco Group | Indorama Ventures vs. VIRGIN WINES UK | Indorama Ventures vs. JD SPORTS FASH |
| COLUMBIA SPORTSWEAR vs. TOTAL GABON | COLUMBIA SPORTSWEAR vs. Walgreens Boots Alliance | COLUMBIA SPORTSWEAR vs. Peak Resources Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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