Correlation Between TOTAL GABON and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON 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 TOTAL GABON and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and INDOFOOD AGRI RES, you can compare the effects of market volatilities on TOTAL GABON 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 TOTAL GABON with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and INDOFOOD AGRI.
Diversification Opportunities for TOTAL GABON and INDOFOOD AGRI
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between TOTAL and INDOFOOD is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON i.e., TOTAL GABON and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between TOTAL GABON and INDOFOOD AGRI
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 0.74 times more return on investment than INDOFOOD AGRI. However, TOTAL GABON is 1.36 times less risky than INDOFOOD AGRI. It trades about 0.06 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.02 per unit of risk. If you would invest 12,348 in TOTAL GABON on September 3, 2024 and sell it today you would earn a total of 6,052 from holding TOTAL GABON or generate 49.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| TOTAL GABON |
| INDOFOOD AGRI RES |
TOTAL GABON and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and INDOFOOD AGRI
The main advantage of trading using opposite TOTAL GABON and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON 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.| TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL ENERGY SERVS | TOTAL GABON vs. Anheuser Busch InBev SANV |
| INDOFOOD AGRI vs. TOTAL GABON | INDOFOOD AGRI vs. Walgreens Boots Alliance | INDOFOOD AGRI vs. Peak Resources Limited |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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