Correlation Between INDOFOOD AGRI and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE SPA, you can compare the effects of market volatilities on INDOFOOD AGRI and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and REVO INSURANCE.
Diversification Opportunities for INDOFOOD AGRI and REVO INSURANCE
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDOFOOD and REVO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and REVO INSURANCE go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and REVO INSURANCE
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 1.99 times more return on investment than REVO INSURANCE. However, INDOFOOD AGRI is 1.99 times more volatile than REVO INSURANCE SPA. It trades about 0.03 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.06 per unit of risk. If you would invest 18.00 in INDOFOOD AGRI RES on September 2, 2024 and sell it today you would earn a total of 4.00 from holding INDOFOOD AGRI RES or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. REVO INSURANCE SPA
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| REVO INSURANCE SPA |
INDOFOOD AGRI and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and REVO INSURANCE
The main advantage of trading using opposite INDOFOOD AGRI and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE'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 |
| REVO INSURANCE vs. The Travelers Companies | REVO INSURANCE vs. Allianz SE | REVO INSURANCE vs. Onxeo SA | REVO INSURANCE vs. Blue Sky Uranium |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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