Correlation Between Information Services and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services International Dentsu and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and INDOFOOD AGRI.
Diversification Opportunities for Information Services and INDOFOOD AGRI
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Information and INDOFOOD is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati 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 Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Information Services and INDOFOOD AGRI
Assuming the 90 days horizon Information Services International Dentsu is expected to generate 0.9 times more return on investment than INDOFOOD AGRI. However, Information Services International Dentsu is 1.11 times less risky than INDOFOOD AGRI. It trades about 0.21 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about -0.08 per unit of risk. If you would invest 3,500 in Information Services International Dentsu on November 6, 2024 and sell it today you would earn a total of 320.00 from holding Information Services International Dentsu or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services Internati vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Information Services |
| INDOFOOD AGRI RES |
Information Services and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and INDOFOOD AGRI
The main advantage of trading using opposite Information Services and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. MOVIE GAMES SA | Information Services vs. UNITED UTILITIES GR | Information Services vs. QINGCI GAMES INC | Information Services vs. Algonquin Power Utilities |
| INDOFOOD AGRI vs. Algonquin Power Utilities | INDOFOOD AGRI vs. PLAYTIKA HOLDING DL 01 | INDOFOOD AGRI vs. Playtech plc | INDOFOOD AGRI vs. Columbia Sportswear |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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