Correlation Between INDOFOOD AGRI and Alstria Office
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Alstria Office 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 Alstria Office 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 alstria office REIT AG, you can compare the effects of market volatilities on INDOFOOD AGRI and Alstria Office 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 Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Alstria Office.
Diversification Opportunities for INDOFOOD AGRI and Alstria Office
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INDOFOOD and Alstria is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT 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 Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Alstria Office go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Alstria Office
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 2.1 times less return on investment than Alstria Office. But when comparing it to its historical volatility, INDOFOOD AGRI RES is 1.32 times less risky than Alstria Office. It trades about 0.02 of its potential returns per unit of risk. alstria office REIT AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 526.00 in alstria office REIT AG on September 25, 2024 and sell it today you would earn a total of 234.00 from holding alstria office REIT AG or generate 44.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. alstria office REIT AG
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| alstria office REIT |
INDOFOOD AGRI and Alstria Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Alstria Office
The main advantage of trading using opposite INDOFOOD AGRI and Alstria Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Alstria Office 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 Alstria Office will offset losses from the drop in Alstria Office's long position.| INDOFOOD AGRI vs. ON SEMICONDUCTOR | INDOFOOD AGRI vs. BE Semiconductor Industries | INDOFOOD AGRI vs. National Beverage Corp | INDOFOOD AGRI vs. UNITED UTILITIES GR |
| Alstria Office vs. Materialise NV | Alstria Office vs. SANOK RUBBER ZY | Alstria Office vs. Sumitomo Rubber Industries | Alstria Office vs. Clean Energy Fuels |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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