Correlation Between INDOFOOD AGRI and AIB Group
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and AIB Group 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 AIB Group 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 AIB Group plc, you can compare the effects of market volatilities on INDOFOOD AGRI and AIB Group 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 AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and AIB Group.
Diversification Opportunities for INDOFOOD AGRI and AIB Group
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between INDOFOOD and AIB is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group plc 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 AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and AIB Group go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and AIB Group
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 6.31 times less return on investment than AIB Group. But when comparing it to its historical volatility, INDOFOOD AGRI RES is 1.04 times less risky than AIB Group. It trades about 0.01 of its potential returns per unit of risk. AIB Group plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 484.00 in AIB Group plc on September 1, 2024 and sell it today you would earn a total of 17.00 from holding AIB Group plc or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. AIB Group plc
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| AIB Group plc |
INDOFOOD AGRI and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and AIB Group
The main advantage of trading using opposite INDOFOOD AGRI and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.| INDOFOOD AGRI vs. Playtech plc | INDOFOOD AGRI vs. GungHo Online Entertainment | INDOFOOD AGRI vs. TAL Education Group | INDOFOOD AGRI vs. CarsalesCom |
| AIB Group vs. NIPPON MEAT PACKERS | AIB Group vs. AUSNUTRIA DAIRY | AIB Group vs. INDOFOOD AGRI RES | AIB Group vs. SENECA FOODS A |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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