Correlation Between INDOFOOD AGRI and Mosaic

Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and Mosaic 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 Mosaic 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 The Mosaic, you can compare the effects of market volatilities on INDOFOOD AGRI and Mosaic 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 Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and Mosaic.

Diversification Opportunities for INDOFOOD AGRI and Mosaic

0.31

Correlation Coefficient

INDOFOOD AGRI  Mosaic

Weak diversification

The 3 months correlation between INDOFOOD and Mosaic is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Mosaic go up and down completely randomly.

Pair Corralation between INDOFOOD AGRI and Mosaic

Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the Mosaic. But the stock apears to be less risky and, when comparing its historical volatility, INDOFOOD AGRI RES is 1.12 times less risky than Mosaic. The stock trades about -0.02 of its potential returns per unit of risk. The The Mosaic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,271  in The Mosaic on December 21, 2024 and sell it today you would earn a total of  130.00  from holding The Mosaic or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

INDOFOOD AGRI RES  vs.  The Mosaic

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.

Mosaic

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mosaic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with INDOFOOD AGRI and Mosaic

The main advantage of trading using opposite INDOFOOD AGRI and Mosaic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, Mosaic 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 Mosaic will offset losses from the drop in Mosaic's long position.

The idea behind INDOFOOD AGRI RES and The Mosaic 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.