Correlation Between INDOFOOD AGRI and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS, you can compare the effects of market volatilities on INDOFOOD AGRI and EBRO FOODS 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 EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and EBRO FOODS.
Diversification Opportunities for INDOFOOD AGRI and EBRO FOODS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and EBRO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and EBRO FOODS go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and EBRO FOODS
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 1.47 times less return on investment than EBRO FOODS. In addition to that, INDOFOOD AGRI is 1.83 times more volatile than EBRO FOODS. It trades about 0.01 of its total potential returns per unit of risk. EBRO FOODS is currently generating about 0.02 per unit of volatility. If you would invest 1,578 in EBRO FOODS on October 28, 2024 and sell it today you would earn a total of 8.00 from holding EBRO FOODS or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. EBRO FOODS
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| EBRO FOODS |
INDOFOOD AGRI and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and EBRO FOODS
The main advantage of trading using opposite INDOFOOD AGRI and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.| INDOFOOD AGRI vs. Information Services International Dentsu | INDOFOOD AGRI vs. AAC TECHNOLOGHLDGADR | INDOFOOD AGRI vs. UNIVERSAL MUSIC GROUP | INDOFOOD AGRI vs. SILVER BULLET DATA |
| EBRO FOODS vs. Mitsubishi Gas Chemical | EBRO FOODS vs. Thai Beverage Public | EBRO FOODS vs. Sekisui Chemical Co | EBRO FOODS vs. Silicon Motion Technology |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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