Correlation Between Otello ASA and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Otello ASA 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 Otello ASA and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otello ASA and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Otello ASA 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 Otello ASA with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otello ASA and INDOFOOD AGRI.
Diversification Opportunities for Otello ASA and INDOFOOD AGRI
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Otello and INDOFOOD is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Otello ASA 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 Otello ASA 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 Otello ASA 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 Otello ASA i.e., Otello ASA and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Otello ASA and INDOFOOD AGRI
Assuming the 90 days horizon Otello ASA is expected to generate 0.48 times more return on investment than INDOFOOD AGRI. However, Otello ASA is 2.07 times less risky than INDOFOOD AGRI. It trades about 0.08 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.01 per unit of risk. If you would invest 62.00 in Otello ASA on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Otello ASA or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Otello ASA vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Otello ASA |
| INDOFOOD AGRI RES |
Otello ASA and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otello ASA and INDOFOOD AGRI
The main advantage of trading using opposite Otello ASA and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otello ASA 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.| Otello ASA vs. SILICON LABORATOR | Otello ASA vs. Suntory Beverage Food | Otello ASA vs. THAI BEVERAGE | Otello ASA vs. Sekisui Chemical Co |
| INDOFOOD AGRI vs. ScanSource | INDOFOOD AGRI vs. Easy Software AG | INDOFOOD AGRI vs. Magic Software Enterprises | INDOFOOD AGRI vs. CyberArk Software |
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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