Correlation Between INDOFOOD AGRI and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and QBE 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 QBE 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 QBE Insurance Group, you can compare the effects of market volatilities on INDOFOOD AGRI and QBE 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and QBE Insurance.
Diversification Opportunities for INDOFOOD AGRI and QBE Insurance
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDOFOOD and QBE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and QBE Insurance go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and QBE Insurance
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the QBE Insurance. But the stock apears to be less risky and, when comparing its historical volatility, INDOFOOD AGRI RES is 1.24 times less risky than QBE Insurance. The stock trades about -0.21 of its potential returns per unit of risk. The QBE Insurance Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,130 in QBE Insurance Group on September 12, 2024 and sell it today you would earn a total of 50.00 from holding QBE Insurance Group or generate 4.42% 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. QBE Insurance Group
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| QBE Insurance Group |
INDOFOOD AGRI and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and QBE Insurance
The main advantage of trading using opposite INDOFOOD AGRI and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, QBE 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| INDOFOOD AGRI vs. SOFI TECHNOLOGIES | INDOFOOD AGRI vs. GLG LIFE TECH | INDOFOOD AGRI vs. RCM TECHNOLOGIES | INDOFOOD AGRI vs. Amkor Technology |
| QBE Insurance vs. Insurance Australia Group | QBE Insurance vs. Superior Plus Corp | QBE Insurance vs. SIVERS SEMICONDUCTORS AB | QBE Insurance vs. CHINA HUARONG ENERHD 50 |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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