Correlation Between INDOFOOD AGRI and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID 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 NEWELL RUBBERMAID , you can compare the effects of market volatilities on INDOFOOD AGRI and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and NEWELL RUBBERMAID.
Diversification Opportunities for INDOFOOD AGRI and NEWELL RUBBERMAID
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INDOFOOD and NEWELL is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and NEWELL RUBBERMAID
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the NEWELL RUBBERMAID. But the stock apears to be less risky and, when comparing its historical volatility, INDOFOOD AGRI RES is 3.25 times less risky than NEWELL RUBBERMAID. The stock trades about -0.21 of its potential returns per unit of risk. The NEWELL RUBBERMAID is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 848.00 in NEWELL RUBBERMAID on September 12, 2024 and sell it today you would earn a total of 230.00 from holding NEWELL RUBBERMAID or generate 27.12% 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. NEWELL RUBBERMAID
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| NEWELL RUBBERMAID |
INDOFOOD AGRI and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and NEWELL RUBBERMAID
The main advantage of trading using opposite INDOFOOD AGRI and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, NEWELL RUBBERMAID 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 NEWELL RUBBERMAID will offset losses from the drop in NEWELL RUBBERMAID's long position.| INDOFOOD AGRI vs. SOFI TECHNOLOGIES | INDOFOOD AGRI vs. GLG LIFE TECH | INDOFOOD AGRI vs. RCM TECHNOLOGIES | INDOFOOD AGRI vs. Amkor Technology |
| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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