Correlation Between INDOFOOD AGRI and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and SCANSOURCE 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 SCANSOURCE 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 SCANSOURCE, you can compare the effects of market volatilities on INDOFOOD AGRI and SCANSOURCE 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 SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and SCANSOURCE.
Diversification Opportunities for INDOFOOD AGRI and SCANSOURCE
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDOFOOD and SCANSOURCE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE 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 SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and SCANSOURCE go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and SCANSOURCE
If you would invest 22.00 in INDOFOOD AGRI RES on September 25, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. SCANSOURCE
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| SCANSOURCE |
INDOFOOD AGRI and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and SCANSOURCE
The main advantage of trading using opposite INDOFOOD AGRI and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, SCANSOURCE 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 SCANSOURCE will offset losses from the drop in SCANSOURCE's long position.| INDOFOOD AGRI vs. ON SEMICONDUCTOR | INDOFOOD AGRI vs. BE Semiconductor Industries | INDOFOOD AGRI vs. National Beverage Corp | INDOFOOD AGRI vs. UNITED UTILITIES GR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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