Correlation Between Indofood CBP and Associated British
Can any of the company-specific risk be diversified away by investing in both Indofood CBP and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Indofood CBP and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood CBP and Associated British.
Diversification Opportunities for Indofood CBP and Associated British
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indofood and Associated is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Indofood CBP Sukses and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Indofood CBP i.e., Indofood CBP and Associated British go up and down completely randomly.
Pair Corralation between Indofood CBP and Associated British
Assuming the 90 days horizon Indofood CBP Sukses is expected to under-perform the Associated British. In addition to that, Indofood CBP is 1.45 times more volatile than Associated British Foods. It trades about 0.0 of its total potential returns per unit of risk. Associated British Foods is currently generating about 0.01 per unit of volatility. If you would invest 2,852 in Associated British Foods on September 14, 2024 and sell it today you would lose (40.00) from holding Associated British Foods or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Indofood CBP Sukses vs. Associated British Foods
Performance |
| Timeline |
| Indofood CBP Sukses |
| Associated British Foods |
Indofood CBP and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood CBP and Associated British
The main advantage of trading using opposite Indofood CBP and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood CBP position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British'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 |
| Associated British vs. Artisan Consumer Goods | Associated British vs. Altavoz Entertainment | Associated British vs. Avi Ltd ADR | Associated British vs. The a2 Milk |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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