Correlation Between INDOFOOD AGRI and JJ SNACK
Can any of the company-specific risk be diversified away by investing in both INDOFOOD AGRI and JJ SNACK 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 JJ SNACK 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 JJ SNACK FOODS, you can compare the effects of market volatilities on INDOFOOD AGRI and JJ SNACK 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 JJ SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDOFOOD AGRI and JJ SNACK.
Diversification Opportunities for INDOFOOD AGRI and JJ SNACK
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDOFOOD and JJ1 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding INDOFOOD AGRI RES and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK 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 JJ SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of INDOFOOD AGRI i.e., INDOFOOD AGRI and JJ SNACK go up and down completely randomly.
Pair Corralation between INDOFOOD AGRI and JJ SNACK
Assuming the 90 days trading horizon INDOFOOD AGRI is expected to generate 1.51 times less return on investment than JJ SNACK. In addition to that, INDOFOOD AGRI is 2.27 times more volatile than JJ SNACK FOODS. It trades about 0.04 of its total potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.15 per unit of volatility. If you would invest 14,922 in JJ SNACK FOODS on September 7, 2024 and sell it today you would earn a total of 1,378 from holding JJ SNACK FOODS or generate 9.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
INDOFOOD AGRI RES vs. JJ SNACK FOODS
Performance |
Timeline |
INDOFOOD AGRI RES |
JJ SNACK FOODS |
INDOFOOD AGRI and JJ SNACK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with INDOFOOD AGRI and JJ SNACK
The main advantage of trading using opposite INDOFOOD AGRI and JJ SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDOFOOD AGRI position performs unexpectedly, JJ SNACK 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 JJ SNACK will offset losses from the drop in JJ SNACK's long position.INDOFOOD AGRI vs. Corporate Office Properties | INDOFOOD AGRI vs. Haier Smart Home | INDOFOOD AGRI vs. MI Homes | INDOFOOD AGRI vs. H FARM SPA |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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