Correlation Between INDOFOOD AGRI and LUMI GRUPPEN
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and LUMI GRUPPEN 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 LUMI GRUPPEN 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 LUMI GRUPPEN AS, you can compare the effects of market volatilities on INDOFOOD AGRI and LUMI GRUPPEN 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 LUMI GRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and LUMI GRUPPEN.
Diversification Opportunities for INDOFOOD AGRI and LUMI GRUPPEN
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between INDOFOOD and LUMI is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS 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 LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and LUMI GRUPPEN go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and LUMI GRUPPEN
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 43.86 times less return on investment than LUMI GRUPPEN. But when comparing it to its historical volatility, INDOFOOD AGRI RES is 1.59 times less risky than LUMI GRUPPEN. It trades about 0.01 of its potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 101.00 in LUMI GRUPPEN AS on October 17, 2024 and sell it today you would earn a total of 10.00 from holding LUMI GRUPPEN AS or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. LUMI GRUPPEN AS
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| LUMI GRUPPEN AS |
INDOFOOD AGRI and LUMI GRUPPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and LUMI GRUPPEN
The main advantage of trading using opposite INDOFOOD AGRI and LUMI GRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, LUMI GRUPPEN 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 LUMI GRUPPEN will offset losses from the drop in LUMI GRUPPEN's long position.| INDOFOOD AGRI vs. Tyson Foods | INDOFOOD AGRI vs. EBRO FOODS | INDOFOOD AGRI vs. Benchmark Electronics | INDOFOOD AGRI vs. Meiko Electronics Co |
| LUMI GRUPPEN vs. INDOFOOD AGRI RES | LUMI GRUPPEN vs. Costco Wholesale Corp | LUMI GRUPPEN vs. Nomad Foods | LUMI GRUPPEN vs. Astral Foods Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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