Correlation Between INDOFOOD AGRI and AstraZeneca PLC

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

Diversification Opportunities for INDOFOOD AGRI and AstraZeneca PLC

-0.67

Correlation Coefficient

INDOFOOD AGRI  AstraZeneca PLC

Excellent diversification

The 3 months correlation between INDOFOOD and AstraZeneca is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between INDOFOOD AGRI and AstraZeneca PLC

Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to under-perform the AstraZeneca PLC. In addition to that, INDOFOOD AGRI is 1.74 times more volatile than AstraZeneca PLC. It trades about -0.02 of its total potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.1 per unit of volatility. If you would invest  12,547  in AstraZeneca PLC on December 26, 2024 and sell it today you would earn a total of  1,063  from holding AstraZeneca PLC or generate 8.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

INDOFOOD AGRI RES  vs.  AstraZeneca PLC

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

AstraZeneca PLC

Risk-Adjusted Performance

OK

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

Pair Trading with INDOFOOD AGRI and AstraZeneca PLC

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

The idea behind INDOFOOD AGRI RES and AstraZeneca PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.