Correlation Between Transport International and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and INDOFOOD AGRI.
Diversification Opportunities for Transport International and INDOFOOD AGRI
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transport and INDOFOOD is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Transport International and INDOFOOD AGRI
Assuming the 90 days horizon Transport International Holdings is expected to generate 2.45 times more return on investment than INDOFOOD AGRI. However, Transport International is 2.45 times more volatile than INDOFOOD AGRI RES. It trades about 0.08 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.03 per unit of risk. If you would invest 28.00 in Transport International Holdings on August 29, 2024 and sell it today you would earn a total of 68.00 from holding Transport International Holdings or generate 242.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Transport International |
| INDOFOOD AGRI RES |
Transport International and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and INDOFOOD AGRI
The main advantage of trading using opposite Transport International and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp | Transport International vs. NMI Holdings | Transport International vs. Origin Agritech |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |