Correlation Between INDOFOOD AGRI and COFCO Joycome

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

Diversification Opportunities for INDOFOOD AGRI and COFCO Joycome

0.13

Correlation Coefficient

INDOFOOD AGRI  COFCO Joycome

Average diversification

The 3 months correlation between INDOFOOD and COFCO is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods 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 COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and COFCO Joycome go up and down completely randomly.

Pair Corralation between INDOFOOD AGRI and COFCO Joycome

Assuming the 90 days trading horizon INDOFOOD AGRI RES is expected to generate 0.52 times more return on investment than COFCO Joycome. However, INDOFOOD AGRI RES is 1.94 times less risky than COFCO Joycome. It trades about 0.05 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about -0.03 per unit of risk. If you would invest  21.00  in INDOFOOD AGRI RES on September 28, 2024 and sell it today you would earn a total of  1.00  from holding INDOFOOD AGRI RES or generate 4.76% return on investment over 90 days.

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

INDOFOOD AGRI RES  vs.  COFCO Joycome Foods

INDOFOOD AGRI RES

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INDOFOOD AGRI RES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

COFCO Joycome Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INDOFOOD AGRI and COFCO Joycome

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

The idea behind INDOFOOD AGRI RES and COFCO Joycome Foods 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.