Correlation Between Indofood CBP and Ajinomoto
Can any of the company-specific risk be diversified away by investing in both Indofood CBP and Ajinomoto 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 Ajinomoto 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 Ajinomoto Co ADR, you can compare the effects of market volatilities on Indofood CBP and Ajinomoto 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 Ajinomoto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood CBP and Ajinomoto.
Diversification Opportunities for Indofood CBP and Ajinomoto
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Ajinomoto is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Indofood CBP Sukses and Ajinomoto Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajinomoto Co ADR 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 Ajinomoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajinomoto Co ADR has no effect on the direction of Indofood CBP i.e., Indofood CBP and Ajinomoto go up and down completely randomly.
Pair Corralation between Indofood CBP and Ajinomoto
Assuming the 90 days horizon Indofood CBP Sukses is expected to under-perform the Ajinomoto. In addition to that, Indofood CBP is 1.27 times more volatile than Ajinomoto Co ADR. It trades about 0.0 of its total potential returns per unit of risk. Ajinomoto Co ADR is currently generating about 0.03 per unit of volatility. If you would invest 3,797 in Ajinomoto Co ADR on September 14, 2024 and sell it today you would earn a total of 486.00 from holding Ajinomoto Co ADR or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Indofood CBP Sukses vs. Ajinomoto Co ADR
Performance |
| Timeline |
| Indofood CBP Sukses |
| Ajinomoto Co ADR |
Indofood CBP and Ajinomoto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood CBP and Ajinomoto
The main advantage of trading using opposite Indofood CBP and Ajinomoto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood CBP position performs unexpectedly, Ajinomoto 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 Ajinomoto will offset losses from the drop in Ajinomoto'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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