Correlation Between INDOFOOD AGRI and COMMERCIAL VEHICLE
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE, you can compare the effects of market volatilities on INDOFOOD AGRI and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and COMMERCIAL VEHICLE.
Diversification Opportunities for INDOFOOD AGRI and COMMERCIAL VEHICLE
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDOFOOD and COMMERCIAL is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and COMMERCIAL VEHICLE go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and COMMERCIAL VEHICLE
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 0.39 times more return on investment than COMMERCIAL VEHICLE. However, INDOFOOD AGRI RES is 2.58 times less risky than COMMERCIAL VEHICLE. It trades about 0.09 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.13 per unit of risk. If you would invest 21.00 in INDOFOOD AGRI RES on August 31, 2024 and sell it today you would earn a total of 1.00 from holding INDOFOOD AGRI RES or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. COMMERCIAL VEHICLE
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| COMMERCIAL VEHICLE |
INDOFOOD AGRI and COMMERCIAL VEHICLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and COMMERCIAL VEHICLE
The main advantage of trading using opposite INDOFOOD AGRI and COMMERCIAL VEHICLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE will offset losses from the drop in COMMERCIAL VEHICLE'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 |
| COMMERCIAL VEHICLE vs. SIVERS SEMICONDUCTORS AB | COMMERCIAL VEHICLE vs. Darden Restaurants | COMMERCIAL VEHICLE vs. Reliance Steel Aluminum | COMMERCIAL VEHICLE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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