Correlation Between INDOFOOD AGRI and Easy Software

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

Diversification Opportunities for INDOFOOD AGRI and Easy Software

0.03

Correlation Coefficient

INDOFOOD AGRI  Easy Software

Significant diversification

The 3 months correlation between INDOFOOD and Easy is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG 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 Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Easy Software go up and down completely randomly.

Pair Corralation between INDOFOOD AGRI and Easy Software

Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the Easy Software. But the stock apears to be less risky and, when comparing its historical volatility, INDOFOOD AGRI RES is 2.17 times less risky than Easy Software. The stock trades about -0.08 of its potential returns per unit of risk. The Easy Software AG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,460  in Easy Software AG on October 11, 2024 and sell it today you would earn a total of  330.00  from holding Easy Software AG or generate 22.6% return on investment over 90 days.

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

INDOFOOD AGRI RES  vs.  Easy Software AG

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INDOFOOD AGRI and Easy Software

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

The idea behind INDOFOOD AGRI RES and Easy Software AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.