Correlation Between INDOFOOD AGRI and Microsoft
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on INDOFOOD AGRI and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Microsoft.
Diversification Opportunities for INDOFOOD AGRI and Microsoft
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INDOFOOD and Microsoft is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Microsoft go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Microsoft
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 10.41 times less return on investment than Microsoft. In addition to that, INDOFOOD AGRI is 1.88 times more volatile than Microsoft. It trades about 0.01 of its total potential returns per unit of risk. Microsoft is currently generating about 0.23 per unit of volatility. If you would invest 37,516 in Microsoft on September 1, 2024 and sell it today you would earn a total of 2,474 from holding Microsoft or generate 6.59% 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. Microsoft
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Microsoft |
INDOFOOD AGRI and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Microsoft
The main advantage of trading using opposite INDOFOOD AGRI and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| INDOFOOD AGRI vs. Playtech plc | INDOFOOD AGRI vs. GungHo Online Entertainment | INDOFOOD AGRI vs. TAL Education Group | INDOFOOD AGRI vs. CarsalesCom |
| Microsoft vs. SIMS METAL MGT | Microsoft vs. INDOFOOD AGRI RES | Microsoft vs. Astral Foods Limited | Microsoft vs. PT Indofood Sukses |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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