Correlation Between Indofood Sukses and Tombstone Exploration
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Tombstone Exploration 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 Sukses and Tombstone Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood Sukses Makmur and Tombstone Exploration Corp, you can compare the effects of market volatilities on Indofood Sukses and Tombstone Exploration 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 Sukses with a short position of Tombstone Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Tombstone Exploration.
Diversification Opportunities for Indofood Sukses and Tombstone Exploration
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indofood and Tombstone is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Tombstone Exploration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tombstone Exploration and Indofood Sukses 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 Sukses Makmur are associated (or correlated) with Tombstone Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tombstone Exploration has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Tombstone Exploration go up and down completely randomly.
Pair Corralation between Indofood Sukses and Tombstone Exploration
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 0.2 times more return on investment than Tombstone Exploration. However, Indofood Sukses Makmur is 5.02 times less risky than Tombstone Exploration. It trades about 0.11 of its potential returns per unit of risk. Tombstone Exploration Corp is currently generating about -0.27 per unit of risk. If you would invest 2,245 in Indofood Sukses Makmur on September 13, 2024 and sell it today you would earn a total of 324.00 from holding Indofood Sukses Makmur or generate 14.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Indofood Sukses Makmur vs. Tombstone Exploration Corp
Performance |
Timeline |
Indofood Sukses Makmur |
Tombstone Exploration |
Indofood Sukses and Tombstone Exploration Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indofood Sukses and Tombstone Exploration
The main advantage of trading using opposite Indofood Sukses and Tombstone Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Tombstone Exploration 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 Tombstone Exploration will offset losses from the drop in Tombstone Exploration's long position.Indofood Sukses vs. Toyo Suisan Kaisha | Indofood Sukses vs. Bank Mandiri Persero | Indofood Sukses vs. Astra International Tbk | Indofood Sukses vs. United Tractors Tbk |
Tombstone Exploration vs. Summa Silver Corp | Tombstone Exploration vs. GoGold Resources | Tombstone Exploration vs. Scottie Resources Corp | Tombstone Exploration vs. Brixton Metals |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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