Correlation Between INDOFOOD AGRI and Erste Group
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Erste 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 Erste 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 Erste Group Bank, you can compare the effects of market volatilities on INDOFOOD AGRI and Erste 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Erste Group.
Diversification Opportunities for INDOFOOD AGRI and Erste Group
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between INDOFOOD and Erste is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Erste Group go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Erste Group
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 12.52 times less return on investment than Erste Group. In addition to that, INDOFOOD AGRI is 1.98 times more volatile than Erste Group Bank. It trades about 0.01 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.26 per unit of volatility. If you would invest 5,908 in Erste Group Bank on October 30, 2024 and sell it today you would earn a total of 322.00 from holding Erste Group Bank or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Erste Group Bank
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Erste Group Bank |
INDOFOOD AGRI and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Erste Group
The main advantage of trading using opposite INDOFOOD AGRI and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Erste 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 Erste Group will offset losses from the drop in Erste Group's long position.| INDOFOOD AGRI vs. Aedas Homes SA | INDOFOOD AGRI vs. PSI Software AG | INDOFOOD AGRI vs. CAIRN HOMES EO | INDOFOOD AGRI vs. OPERA SOFTWARE |
| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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