Correlation Between INDOFOOD AGRI and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on INDOFOOD AGRI and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Quaker Chemical.
Diversification Opportunities for INDOFOOD AGRI and Quaker Chemical
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between INDOFOOD and Quaker is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Quaker Chemical go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Quaker Chemical
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 0.95 times more return on investment than Quaker Chemical. However, INDOFOOD AGRI RES is 1.06 times less risky than Quaker Chemical. It trades about 0.01 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.16 per unit of risk. If you would invest 22.00 in INDOFOOD AGRI RES on October 30, 2024 and sell it today you would earn a total of 0.00 from holding INDOFOOD AGRI RES or generate 0.0% 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. Quaker Chemical
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Quaker Chemical |
INDOFOOD AGRI and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Quaker Chemical
The main advantage of trading using opposite INDOFOOD AGRI and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical'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 |
| Quaker Chemical vs. National Retail Properties | Quaker Chemical vs. ANGLO ASIAN MINING | Quaker Chemical vs. Burlington Stores | Quaker Chemical vs. MAG SILVER |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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