Correlation Between INDOFOOD AGRI and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on INDOFOOD AGRI and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and COLUMBIA SPORTSWEAR.
Diversification Opportunities for INDOFOOD AGRI and COLUMBIA SPORTSWEAR
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INDOFOOD and COLUMBIA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and COLUMBIA SPORTSWEAR
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 2.5 times less return on investment than COLUMBIA SPORTSWEAR. In addition to that, INDOFOOD AGRI is 1.19 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.11 of its total potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.31 per unit of volatility. If you would invest 7,322 in COLUMBIA SPORTSWEAR on September 2, 2024 and sell it today you would earn a total of 978.00 from holding COLUMBIA SPORTSWEAR or generate 13.36% 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. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| COLUMBIA SPORTSWEAR |
INDOFOOD AGRI and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite INDOFOOD AGRI and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| INDOFOOD AGRI vs. SIVERS SEMICONDUCTORS AB | INDOFOOD AGRI vs. Darden Restaurants | INDOFOOD AGRI vs. Reliance Steel Aluminum | INDOFOOD AGRI vs. Q2M Managementberatung AG |
| COLUMBIA SPORTSWEAR vs. SIVERS SEMICONDUCTORS AB | COLUMBIA SPORTSWEAR vs. Darden Restaurants | COLUMBIA SPORTSWEAR vs. Reliance Steel Aluminum | COLUMBIA SPORTSWEAR vs. Q2M Managementberatung AG |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance |