Correlation Between INDOFOOD AGRI and Penta Ocean
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Penta Ocean 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 Penta Ocean 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 Penta Ocean Construction Co, you can compare the effects of market volatilities on INDOFOOD AGRI and Penta Ocean 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 Penta Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Penta Ocean.
Diversification Opportunities for INDOFOOD AGRI and Penta Ocean
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between INDOFOOD and Penta is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Ocean Construc 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 Penta Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Ocean Construc has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Penta Ocean go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Penta Ocean
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 12.68 times less return on investment than Penta Ocean. In addition to that, INDOFOOD AGRI is 1.19 times more volatile than Penta Ocean Construction Co. It trades about 0.01 of its total potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.11 per unit of volatility. If you would invest 376.00 in Penta Ocean Construction Co on October 30, 2024 and sell it today you would earn a total of 20.00 from holding Penta Ocean Construction Co or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Penta Ocean Construction Co
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Penta Ocean Construc |
INDOFOOD AGRI and Penta Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Penta Ocean
The main advantage of trading using opposite INDOFOOD AGRI and Penta Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Penta Ocean 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 Penta Ocean will offset losses from the drop in Penta Ocean's long position.| INDOFOOD AGRI vs. Aedas Homes SA | INDOFOOD AGRI vs. PSI Software AG | INDOFOOD AGRI vs. CAIRN HOMES EO | INDOFOOD AGRI vs. OPERA SOFTWARE |
| Penta Ocean vs. Nishi Nippon Railroad Co | Penta Ocean vs. United Airlines Holdings | Penta Ocean vs. NAGOYA RAILROAD | Penta Ocean vs. Transport International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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