Correlation Between Nasdaq and Indorama Ventures

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Indorama Ventures 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 Nasdaq and Indorama Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Indorama Ventures PCL, you can compare the effects of market volatilities on Nasdaq and Indorama Ventures 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 Nasdaq with a short position of Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Indorama Ventures.

Diversification Opportunities for Nasdaq and Indorama Ventures

0.58

Correlation Coefficient

Nasdaq  Indorama Ventures

Very weak diversification

The 3 months correlation between Nasdaq and Indorama is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of Nasdaq i.e., Nasdaq and Indorama Ventures go up and down completely randomly.

Pair Corralation between Nasdaq and Indorama Ventures

Given the investment horizon of 90 days Nasdaq is expected to generate 1.55 times less return on investment than Indorama Ventures. But when comparing it to its historical volatility, Nasdaq Inc is 1.98 times less risky than Indorama Ventures. It trades about 0.15 of its potential returns per unit of risk. Indorama Ventures PCL is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,374  in Indorama Ventures PCL on September 15, 2024 and sell it today you would earn a total of  326.00  from holding Indorama Ventures PCL or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Nasdaq Inc  vs.  Indorama Ventures PCL

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Indorama Ventures PCL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indorama Ventures PCL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Indorama Ventures disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Indorama Ventures

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

The idea behind Nasdaq Inc and Indorama Ventures PCL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.