Correlation Between INDOFOOD AGRI and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and KYUSHU EL 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 AGRI and KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDOFOOD AGRI RES and KYUSHU EL PWR, you can compare the effects of market volatilities on INDOFOOD AGRI and KYUSHU EL 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 AGRI with a short position of KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and KYUSHU EL.
Diversification Opportunities for INDOFOOD AGRI and KYUSHU EL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and KYUSHU is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and KYUSHU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYUSHU EL PWR and INDOFOOD AGRI 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 AGRI RES are associated (or correlated) with KYUSHU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYUSHU EL PWR has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and KYUSHU EL go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and KYUSHU EL
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 1.9 times less return on investment than KYUSHU EL. But when comparing it to its historical volatility, INDOFOOD AGRI RES is 1.06 times less risky than KYUSHU EL. It trades about 0.04 of its potential returns per unit of risk. KYUSHU EL PWR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 565.00 in KYUSHU EL PWR on September 12, 2024 and sell it today you would earn a total of 320.00 from holding KYUSHU EL PWR or generate 56.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. KYUSHU EL PWR
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| KYUSHU EL PWR |
INDOFOOD AGRI and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and KYUSHU EL
The main advantage of trading using opposite INDOFOOD AGRI and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, KYUSHU EL 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 KYUSHU EL will offset losses from the drop in KYUSHU EL's long position.| INDOFOOD AGRI vs. SOFI TECHNOLOGIES | INDOFOOD AGRI vs. GLG LIFE TECH | INDOFOOD AGRI vs. RCM TECHNOLOGIES | INDOFOOD AGRI vs. Amkor Technology |
| KYUSHU EL vs. Tower Semiconductor | KYUSHU EL vs. Ultra Clean Holdings | KYUSHU EL vs. NorAm Drilling AS | KYUSHU EL vs. ON SEMICONDUCTOR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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