Correlation Between INDOFOOD AGRI and Merit Medical
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on INDOFOOD AGRI and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Merit Medical.
Diversification Opportunities for INDOFOOD AGRI and Merit Medical
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and Merit is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Merit Medical go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Merit Medical
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the Merit Medical. In addition to that, INDOFOOD AGRI is 2.1 times more volatile than Merit Medical Systems. It trades about -0.14 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about -0.06 per unit of volatility. If you would invest 9,950 in Merit Medical Systems on November 27, 2024 and sell it today you would lose (200.00) from holding Merit Medical Systems or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Merit Medical Systems
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Merit Medical Systems |
INDOFOOD AGRI and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Merit Medical
The main advantage of trading using opposite INDOFOOD AGRI and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical'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 |
| Merit Medical vs. EPSILON HEALTHCARE LTD | Merit Medical vs. SENECA FOODS A | Merit Medical vs. PATTIES FOODS | Merit Medical vs. RCI Hospitality Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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