Correlation Between INDOFOOD AGRI and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband, you can compare the effects of market volatilities on INDOFOOD AGRI and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Liberty Broadband.
Diversification Opportunities for INDOFOOD AGRI and Liberty Broadband
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between INDOFOOD and Liberty is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Liberty Broadband go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Liberty Broadband
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the Liberty Broadband. In addition to that, INDOFOOD AGRI is 1.17 times more volatile than Liberty Broadband. It trades about -0.13 of its total potential returns per unit of risk. Liberty Broadband is currently generating about -0.13 per unit of volatility. If you would invest 7,700 in Liberty Broadband on October 18, 2024 and sell it today you would lose (300.00) from holding Liberty Broadband or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Liberty Broadband
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Liberty Broadband |
INDOFOOD AGRI and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Liberty Broadband
The main advantage of trading using opposite INDOFOOD AGRI and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.| INDOFOOD AGRI vs. Tyson Foods | INDOFOOD AGRI vs. EBRO FOODS | INDOFOOD AGRI vs. Benchmark Electronics | INDOFOOD AGRI vs. Meiko Electronics Co |
| Liberty Broadband vs. United Utilities Group | Liberty Broadband vs. National Health Investors | Liberty Broadband vs. INDOFOOD AGRI RES | Liberty Broadband vs. YOOMA WELLNESS INC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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