Correlation Between Exotic Food and Indara Insurance

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

By analyzing existing cross correlation between Exotic Food Public and Indara Insurance Public, you can compare the effects of market volatilities on Exotic Food and Indara Insurance 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 Exotic Food with a short position of Indara Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exotic Food and Indara Insurance.

Diversification Opportunities for Exotic Food and Indara Insurance

0.75

Correlation Coefficient

Exotic Food  Indara Insurance

Poor diversification

The 3 months correlation between Exotic and Indara is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Exotic Food Public and Indara Insurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indara Insurance Public and Exotic Food 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 Exotic Food Public are associated (or correlated) with Indara Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indara Insurance Public has no effect on the direction of Exotic Food i.e., Exotic Food and Indara Insurance go up and down completely randomly.

Pair Corralation between Exotic Food and Indara Insurance

Assuming the 90 days horizon Exotic Food Public is expected to under-perform the Indara Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Exotic Food Public is 1.75 times less risky than Indara Insurance. The stock trades about -0.24 of its potential returns per unit of risk. The Indara Insurance Public is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,900  in Indara Insurance Public on September 17, 2024 and sell it today you would lose (1,000.00) from holding Indara Insurance Public or give up 11.24% of portfolio value over 90 days.

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

Exotic Food Public  vs.  Indara Insurance Public

Exotic Food Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exotic Food Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Indara Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indara Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Exotic Food and Indara Insurance

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

The idea behind Exotic Food Public and Indara Insurance Public 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.