Correlation Between INDOFOOD AGRI and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and SHELF DRILLING 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 SHELF DRILLING 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 SHELF DRILLING LTD, you can compare the effects of market volatilities on INDOFOOD AGRI and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and SHELF DRILLING.
Diversification Opportunities for INDOFOOD AGRI and SHELF DRILLING
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and SHELF is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and SHELF DRILLING go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and SHELF DRILLING
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 0.48 times more return on investment than SHELF DRILLING. However, INDOFOOD AGRI RES is 2.08 times less risky than SHELF DRILLING. It trades about 0.09 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.34 per unit of risk. If you would invest 21.00 in INDOFOOD AGRI RES on August 29, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. SHELF DRILLING LTD
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| SHELF DRILLING LTD |
INDOFOOD AGRI and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and SHELF DRILLING
The main advantage of trading using opposite INDOFOOD AGRI and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Microsoft | INDOFOOD AGRI vs. Microsoft |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |