Correlation Between Indofood CBP and A2 Milk
Can any of the company-specific risk be diversified away by investing in both Indofood CBP and A2 Milk 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 Indofood CBP and A2 Milk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood CBP Sukses and The A2 Milk, you can compare the effects of market volatilities on Indofood CBP and A2 Milk 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 Indofood CBP with a short position of A2 Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood CBP and A2 Milk.
Diversification Opportunities for Indofood CBP and A2 Milk
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indofood and ACOPY is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Indofood CBP Sukses and The A2 Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2 Milk and Indofood CBP 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 Indofood CBP Sukses are associated (or correlated) with A2 Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2 Milk has no effect on the direction of Indofood CBP i.e., Indofood CBP and A2 Milk go up and down completely randomly.
Pair Corralation between Indofood CBP and A2 Milk
Assuming the 90 days horizon Indofood CBP Sukses is expected to under-perform the A2 Milk. But the pink sheet apears to be less risky and, when comparing its historical volatility, Indofood CBP Sukses is 1.33 times less risky than A2 Milk. The pink sheet trades about 0.0 of its potential returns per unit of risk. The The A2 Milk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 256.00 in The A2 Milk on September 14, 2024 and sell it today you would earn a total of 92.00 from holding The A2 Milk or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Indofood CBP Sukses vs. The A2 Milk
Performance |
| Timeline |
| Indofood CBP Sukses |
| A2 Milk |
Indofood CBP and A2 Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood CBP and A2 Milk
The main advantage of trading using opposite Indofood CBP and A2 Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood CBP position performs unexpectedly, A2 Milk 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 A2 Milk will offset losses from the drop in A2 Milk's long position.| Indofood CBP vs. Indofood Sukses Makmur | Indofood CBP vs. First Pacific | Indofood CBP vs. Grupo Herdez SAB | Indofood CBP vs. Fraser and Neave |
| A2 Milk vs. Golden Agri Resources | A2 Milk vs. Wilmar International | A2 Milk vs. Brasilagro Adr | A2 Milk vs. Recursion Pharmaceuticals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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