Correlation Between INDOFOOD AGRI and BP Plc
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and BP Plc 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 BP Plc 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 BP plc, you can compare the effects of market volatilities on INDOFOOD AGRI and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and BP Plc.
Diversification Opportunities for INDOFOOD AGRI and BP Plc
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and BSU is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and BP Plc go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and BP Plc
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 1.52 times more return on investment than BP Plc. However, INDOFOOD AGRI is 1.52 times more volatile than BP plc. It trades about 0.02 of its potential returns per unit of risk. BP plc is currently generating about 0.0 per unit of risk. If you would invest 19.00 in INDOFOOD AGRI RES on November 27, 2024 and sell it today you would earn a total of 1.00 from holding INDOFOOD AGRI RES or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. BP plc
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| BP plc |
INDOFOOD AGRI and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and BP Plc
The main advantage of trading using opposite INDOFOOD AGRI and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| INDOFOOD AGRI vs. THAI BEVERAGE | INDOFOOD AGRI vs. BIOPHARMA CREDIT DL | INDOFOOD AGRI vs. Carnegie Clean Energy | INDOFOOD AGRI vs. Discover Financial Services |
| BP Plc vs. EBRO FOODS | BP Plc vs. Cars Inc | BP Plc vs. Grupo Carso SAB | BP Plc vs. Commercial Vehicle Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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