Correlation Between THRACE PLASTICS and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and INDOFOOD AGRI RES, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and INDOFOOD AGRI.
Diversification Opportunities for THRACE PLASTICS and INDOFOOD AGRI
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between THRACE and INDOFOOD is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and INDOFOOD AGRI
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 1.98 times less return on investment than INDOFOOD AGRI. But when comparing it to its historical volatility, THRACE PLASTICS is 1.7 times less risky than INDOFOOD AGRI. It trades about 0.05 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21.00 in INDOFOOD AGRI RES on August 30, 2024 and sell it today you would earn a total of 1.00 from holding INDOFOOD AGRI RES or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
THRACE PLASTICS vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| THRACE PLASTICS |
| INDOFOOD AGRI RES |
THRACE PLASTICS and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and INDOFOOD AGRI
The main advantage of trading using opposite THRACE PLASTICS and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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.| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Superior Plus Corp | THRACE PLASTICS vs. SIVERS SEMICONDUCTORS AB |
| INDOFOOD AGRI vs. GOODYEAR T RUBBER | INDOFOOD AGRI vs. Vulcan Materials | INDOFOOD AGRI vs. THRACE PLASTICS | INDOFOOD AGRI vs. Plastic Omnium |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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