Correlation Between Chuangs China and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Chuangs China and INDOFOOD AGRI 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 Chuangs China and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Chuangs China and INDOFOOD AGRI 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 Chuangs China with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and INDOFOOD AGRI.
Diversification Opportunities for Chuangs China and INDOFOOD AGRI
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and INDOFOOD is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES and Chuangs China 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 Chuangs China Investments are associated (or correlated) with INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Chuangs China i.e., Chuangs China and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Chuangs China and INDOFOOD AGRI
If you would invest 22.00 in INDOFOOD AGRI RES on September 14, 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 | 100.0% |
Values | Daily Returns |
Chuangs China Investments vs. INDOFOOD AGRI RES
Performance |
Timeline |
Chuangs China Investments |
INDOFOOD AGRI RES |
Chuangs China and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chuangs China and INDOFOOD AGRI
The main advantage of trading using opposite Chuangs China and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.Chuangs China vs. Superior Plus Corp | Chuangs China vs. SIVERS SEMICONDUCTORS AB | Chuangs China vs. Reliance Steel Aluminum | Chuangs China vs. CHINA HUARONG ENERHD 50 |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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