Correlation Between J+J SNACK and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both J+J SNACK and INDOFOOD AGRI 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 J+J SNACK and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJ SNACK FOODS and INDOFOOD AGRI RES, you can compare the effects of market volatilities on J+J SNACK and INDOFOOD AGRI 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 J+J SNACK with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and INDOFOOD AGRI.
Diversification Opportunities for J+J SNACK and INDOFOOD AGRI
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between J+J and INDOFOOD is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of J+J SNACK i.e., J+J SNACK and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between J+J SNACK and INDOFOOD AGRI
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.63 times more return on investment than INDOFOOD AGRI. However, JJ SNACK FOODS is 1.58 times less risky than INDOFOOD AGRI. It trades about 0.25 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.01 per unit of risk. If you would invest 15,200 in JJ SNACK FOODS on September 5, 2024 and sell it today you would earn a total of 1,100 from holding JJ SNACK FOODS or generate 7.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
JJ SNACK FOODS vs. INDOFOOD AGRI RES
Performance |
Timeline |
JJ SNACK FOODS |
INDOFOOD AGRI RES |
J+J SNACK and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with J+J SNACK and INDOFOOD AGRI
The main advantage of trading using opposite J+J SNACK and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.The idea behind JJ SNACK FOODS and INDOFOOD AGRI RES 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.INDOFOOD AGRI vs. ELMOS SEMICONDUCTOR | INDOFOOD AGRI vs. MagnaChip Semiconductor Corp | INDOFOOD AGRI vs. ON SEMICONDUCTOR | INDOFOOD AGRI vs. Cogent Communications Holdings |
Check out your portfolio center.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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |