Correlation Between Island Concepts and Fast Food
Can any of the company-specific risk be diversified away by investing in both Island Concepts and Fast Food 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 Island Concepts and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Island Concepts Indonesia and Fast Food Indonesia, you can compare the effects of market volatilities on Island Concepts and Fast Food 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 Island Concepts with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Island Concepts and Fast Food.
Diversification Opportunities for Island Concepts and Fast Food
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Island and Fast is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Island Concepts Indonesia and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Island Concepts 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 Island Concepts Indonesia are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Island Concepts i.e., Island Concepts and Fast Food go up and down completely randomly.
Pair Corralation between Island Concepts and Fast Food
Assuming the 90 days trading horizon Island Concepts Indonesia is expected to generate 0.68 times more return on investment than Fast Food. However, Island Concepts Indonesia is 1.46 times less risky than Fast Food. It trades about -0.06 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.35 per unit of risk. If you would invest 3,500 in Island Concepts Indonesia on September 3, 2024 and sell it today you would lose (100.00) from holding Island Concepts Indonesia or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Island Concepts Indonesia vs. Fast Food Indonesia
Performance |
| Timeline |
| Island Concepts Indonesia |
| Fast Food Indonesia |
Island Concepts and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Island Concepts and Fast Food
The main advantage of trading using opposite Island Concepts and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Island Concepts position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food's long position.| Island Concepts vs. Indonesian Paradise Property | Island Concepts vs. Inter Delta Tbk | Island Concepts vs. Jakarta Setiabudi Internasional | Island Concepts vs. Fast Food Indonesia |
| Fast Food vs. Mitra Pinasthika Mustika | Fast Food vs. Jakarta Int Hotels | Fast Food vs. Asuransi Harta Aman | Fast Food vs. Indosterling Technomedia Tbk |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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