Correlation Between INDOFOOD AGRI and Power Of

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

Diversification Opportunities for INDOFOOD AGRI and Power Of

-0.61

Correlation Coefficient

INDOFOOD AGRI  Power Of

Excellent diversification

The 3 months correlation between INDOFOOD and Power is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Of 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 Power Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Of has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and Power Of go up and down completely randomly.

Pair Corralation between INDOFOOD AGRI and Power Of

Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the Power Of. In addition to that, INDOFOOD AGRI is 1.7 times more volatile than Power of. It trades about -0.02 of its total potential returns per unit of risk. Power of is currently generating about 0.11 per unit of volatility. If you would invest  2,943  in Power of on December 23, 2024 and sell it today you would earn a total of  257.00  from holding Power of or generate 8.73% return on investment over 90 days.

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

INDOFOOD AGRI RES  vs.  Power of

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

Power Of

Risk-Adjusted Performance

OK

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

Pair Trading with INDOFOOD AGRI and Power Of

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

The idea behind INDOFOOD AGRI RES and Power of 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.