Correlation Between INDOFOOD AGRI and Shin-Etsu Chemical
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Shin-Etsu 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 Shin-Etsu 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 Shin Etsu Chemical Co, you can compare the effects of market volatilities on INDOFOOD AGRI and Shin-Etsu 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 Shin-Etsu Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Shin-Etsu Chemical.
Diversification Opportunities for INDOFOOD AGRI and Shin-Etsu Chemical
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between INDOFOOD and Shin-Etsu is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu 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 Shin-Etsu Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Shin-Etsu Chemical go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Shin-Etsu Chemical
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 0.74 times more return on investment than Shin-Etsu Chemical. However, INDOFOOD AGRI RES is 1.36 times less risky than Shin-Etsu Chemical. It trades about 0.01 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.19 per unit of risk. If you would invest 22.00 in INDOFOOD AGRI RES on October 12, 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 Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Shin Etsu Chemical |
INDOFOOD AGRI and Shin-Etsu Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Shin-Etsu Chemical
The main advantage of trading using opposite INDOFOOD AGRI and Shin-Etsu Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Shin-Etsu 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 Shin-Etsu Chemical will offset losses from the drop in Shin-Etsu Chemical's long position.| INDOFOOD AGRI vs. ONWARD MEDICAL BV | INDOFOOD AGRI vs. Diamyd Medical AB | INDOFOOD AGRI vs. Compagnie Plastic Omnium | INDOFOOD AGRI vs. Advanced Medical Solutions |
| Shin-Etsu Chemical vs. INDOFOOD AGRI RES | Shin-Etsu Chemical vs. AXWAY SOFTWARE EO | Shin-Etsu Chemical vs. Kingdee International Software | Shin-Etsu Chemical vs. COFCO Joycome Foods |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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