Correlation Between INDOFOOD AGRI and Caseys General

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

Diversification Opportunities for INDOFOOD AGRI and Caseys General

0.47

Correlation Coefficient

INDOFOOD AGRI  Caseys General

Very weak diversification

The 3 months correlation between INDOFOOD and Caseys is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Caseys General go up and down completely randomly.

Pair Corralation between INDOFOOD AGRI and Caseys General

Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 1.67 times less return on investment than Caseys General. In addition to that, INDOFOOD AGRI is 1.26 times more volatile than Caseys General Stores. It trades about 0.05 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.1 per unit of volatility. If you would invest  34,552  in Caseys General Stores on October 10, 2024 and sell it today you would earn a total of  3,248  from holding Caseys General Stores or generate 9.4% return on investment over 90 days.

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

INDOFOOD AGRI RES  vs.  Caseys General Stores

INDOFOOD AGRI RES

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INDOFOOD AGRI RES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Caseys General Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INDOFOOD AGRI and Caseys General

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

The idea behind INDOFOOD AGRI RES and Caseys General Stores 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.