Correlation Between INDOFOOD AGRI and National Health
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and National Health 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 National Health 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 National Health Investors, you can compare the effects of market volatilities on INDOFOOD AGRI and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and National Health.
Diversification Opportunities for INDOFOOD AGRI and National Health
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INDOFOOD and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and National Health go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and National Health
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 0.97 times more return on investment than National Health. However, INDOFOOD AGRI RES is 1.04 times less risky than National Health. It trades about 0.01 of its potential returns per unit of risk. National Health Investors is currently generating about -0.1 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDOFOOD AGRI RES vs. National Health Investors
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| National Health Investors |
INDOFOOD AGRI and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and National Health
The main advantage of trading using opposite INDOFOOD AGRI and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health'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 |
| National Health vs. The Boston Beer | National Health vs. X FAB Silicon Foundries | National Health vs. SAN MIGUEL BREWERY | National Health vs. China Resources Beer |
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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