Correlation Between INDOFOOD AGRI and INTER CARS
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and INTER CARS 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 INTER CARS 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 INTER CARS SA, you can compare the effects of market volatilities on INDOFOOD AGRI and INTER CARS 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 INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and INTER CARS.
Diversification Opportunities for INDOFOOD AGRI and INTER CARS
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and INTER is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA 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 INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and INTER CARS go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and INTER CARS
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 15.86 times less return on investment than INTER CARS. In addition to that, INDOFOOD AGRI is 1.35 times more volatile than INTER CARS SA. It trades about 0.01 of its total potential returns per unit of risk. INTER CARS SA is currently generating about 0.25 per unit of volatility. If you would invest 10,460 in INTER CARS SA on September 1, 2024 and sell it today you would earn a total of 1,060 from holding INTER CARS SA or generate 10.13% 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. INTER CARS SA
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| INTER CARS SA |
INDOFOOD AGRI and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and INTER CARS
The main advantage of trading using opposite INDOFOOD AGRI and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, INTER CARS 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 INTER CARS will offset losses from the drop in INTER CARS's long position.| INDOFOOD AGRI vs. Playtech plc | INDOFOOD AGRI vs. GungHo Online Entertainment | INDOFOOD AGRI vs. TAL Education Group | INDOFOOD AGRI vs. CarsalesCom |
| INTER CARS vs. Commercial Vehicle Group | INTER CARS vs. Zijin Mining Group | INTER CARS vs. GEELY AUTOMOBILE | INTER CARS vs. Grupo Carso SAB |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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