Correlation Between INDOFOOD AGRI and Corporate Office
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Corporate Office 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 Corporate Office 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 Corporate Office Properties, you can compare the effects of market volatilities on INDOFOOD AGRI and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Corporate Office.
Diversification Opportunities for INDOFOOD AGRI and Corporate Office
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between INDOFOOD and Corporate is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Corporate Office go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and Corporate Office
Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 1.17 times more return on investment than Corporate Office. However, INDOFOOD AGRI is 1.17 times more volatile than Corporate Office Properties. It trades about 0.01 of its potential returns per unit of risk. Corporate Office Properties is currently generating about -0.23 per unit of risk. If you would invest 22.00 in INDOFOOD AGRI RES on October 11, 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. Corporate Office Properties
Performance |
| Timeline |
| INDOFOOD AGRI RES |
| Corporate Office Pro |
INDOFOOD AGRI and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDOFOOD AGRI and Corporate Office
The main advantage of trading using opposite INDOFOOD AGRI and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| INDOFOOD AGRI vs. PACIFIC ONLINE | INDOFOOD AGRI vs. BJs Restaurants | INDOFOOD AGRI vs. SYSTEMAIR AB | INDOFOOD AGRI vs. ETFS Coffee ETC |
| Corporate Office vs. Astral Foods Limited | Corporate Office vs. FUYO GENERAL LEASE | Corporate Office vs. INDOFOOD AGRI RES | Corporate Office vs. Ebro Foods SA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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