Correlation Between INDOFOOD AGRI and PARKWAY LIFE
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and PARKWAY LIFE 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 PARKWAY LIFE 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 PARKWAY LIFE REAL, you can compare the effects of market volatilities on INDOFOOD AGRI and PARKWAY LIFE 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 PARKWAY LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and PARKWAY LIFE.
Diversification Opportunities for INDOFOOD AGRI and PARKWAY LIFE
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and PARKWAY is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and PARKWAY LIFE REAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKWAY LIFE REAL 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 PARKWAY LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKWAY LIFE REAL has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and PARKWAY LIFE go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and PARKWAY LIFE
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 1.32 times more return on investment than PARKWAY LIFE. However, INDOFOOD AGRI is 1.32 times more volatile than PARKWAY LIFE REAL. It trades about 0.01 of its potential returns per unit of risk. PARKWAY LIFE REAL is currently generating about -0.11 per unit of risk. If you would invest 21.00 in INDOFOOD AGRI RES on December 4, 2024 and sell it today you would earn a total of 0.00 from holding INDOFOOD AGRI RES or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. PARKWAY LIFE REAL
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| PARKWAY LIFE REAL |
INDOFOOD AGRI and PARKWAY LIFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and PARKWAY LIFE
The main advantage of trading using opposite INDOFOOD AGRI and PARKWAY LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, PARKWAY LIFE 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 PARKWAY LIFE will offset losses from the drop in PARKWAY LIFE's long position.| INDOFOOD AGRI vs. Axway Software SA | INDOFOOD AGRI vs. FORMPIPE SOFTWARE AB | INDOFOOD AGRI vs. Allegheny Technologies Incorporated | INDOFOOD AGRI vs. GBS Software AG |
| PARKWAY LIFE vs. Hyster Yale Materials Handling | PARKWAY LIFE vs. Games Workshop Group | PARKWAY LIFE vs. Martin Marietta Materials | PARKWAY LIFE vs. GAMES BOX SA |
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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