Correlation Between BJs Restaurants and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both BJs Restaurants 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 BJs Restaurants and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and INDOFOOD AGRI RES, you can compare the effects of market volatilities on BJs Restaurants 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 BJs Restaurants with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and INDOFOOD AGRI.
Diversification Opportunities for BJs Restaurants and INDOFOOD AGRI
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BJs and INDOFOOD is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants i.e., BJs Restaurants and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between BJs Restaurants and INDOFOOD AGRI
Assuming the 90 days trading horizon BJs Restaurants is expected to generate 1.45 times more return on investment than INDOFOOD AGRI. However, BJs Restaurants is 1.45 times more volatile than INDOFOOD AGRI RES. It trades about 0.1 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.01 per unit of risk. If you would invest 3,340 in BJs Restaurants on October 11, 2024 and sell it today you would earn a total of 120.00 from holding BJs Restaurants or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| BJs Restaurants |
| INDOFOOD AGRI RES |
BJs Restaurants and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and INDOFOOD AGRI
The main advantage of trading using opposite BJs Restaurants and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants 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.| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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