Correlation Between INDOFOOD AGRI and Pan Pacific
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Pan Pacific 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 Pan Pacific 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 Pan Pacific International, you can compare the effects of market volatilities on INDOFOOD AGRI and Pan Pacific 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 Pan Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Pan Pacific.
Diversification Opportunities for INDOFOOD AGRI and Pan Pacific
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDOFOOD and Pan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Pan Pacific International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Pacific International 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 Pan Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Pacific International has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Pan Pacific go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Pan Pacific
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 2.46 times less return on investment than Pan Pacific. But when comparing it to its historical volatility, INDOFOOD AGRI RES is 1.13 times less risky than Pan Pacific. It trades about 0.03 of its potential returns per unit of risk. Pan Pacific International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,234 in Pan Pacific International on August 31, 2024 and sell it today you would earn a total of 1,066 from holding Pan Pacific International or generate 86.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Pan Pacific International
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Pan Pacific International |
INDOFOOD AGRI and Pan Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Pan Pacific
The main advantage of trading using opposite INDOFOOD AGRI and Pan Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Pan Pacific 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 Pan Pacific will offset losses from the drop in Pan Pacific's long position.| INDOFOOD AGRI vs. SIVERS SEMICONDUCTORS AB | INDOFOOD AGRI vs. Darden Restaurants | INDOFOOD AGRI vs. Reliance Steel Aluminum | INDOFOOD AGRI vs. Q2M Managementberatung AG |
| Pan Pacific vs. PT Indofood Sukses | Pan Pacific vs. TYSON FOODS A | Pan Pacific vs. INDOFOOD AGRI RES | Pan Pacific vs. Performance Food Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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