Correlation Between Q2M Managementberatu and INDOFOOD AGRI

Can any of the company-specific risk be diversified away by investing in both Q2M Managementberatu 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 Q2M Managementberatu and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q2M Managementberatung AG and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Q2M Managementberatu 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 Q2M Managementberatu with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2M Managementberatu and INDOFOOD AGRI.

Diversification Opportunities for Q2M Managementberatu and INDOFOOD AGRI

0.25

Correlation Coefficient

Q2M Managementberatu  INDOFOOD AGRI

Modest diversification

The 3 months correlation between Q2M and INDOFOOD is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Q2M Managementberatung AG 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 Q2M Managementberatu 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 Q2M Managementberatung AG 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 Q2M Managementberatu i.e., Q2M Managementberatu and INDOFOOD AGRI go up and down completely randomly.

Pair Corralation between Q2M Managementberatu and INDOFOOD AGRI

Assuming the 90 days trading horizon Q2M Managementberatung AG is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, Q2M Managementberatung AG is 4.32 times less risky than INDOFOOD AGRI. The stock trades about -0.13 of its potential returns per unit of risk. The INDOFOOD AGRI RES is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  22.00  in INDOFOOD AGRI RES on December 30, 2024 and sell it today you would lose (1.00) from holding INDOFOOD AGRI RES or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Q2M Managementberatung AG  vs.  INDOFOOD AGRI RES

Q2M Managementberatung

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q2M Managementberatung AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Q2M Managementberatu is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

INDOFOOD AGRI RES

Risk-Adjusted Performance

Very Weak

Over the last 90 days INDOFOOD AGRI RES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INDOFOOD AGRI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Q2M Managementberatu and INDOFOOD AGRI

The main advantage of trading using opposite Q2M Managementberatu and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2M Managementberatu 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.

The idea behind Q2M Managementberatung AG and INDOFOOD AGRI RES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..