Correlation Between ConAgra Foods and Indofood Sukses
Can any of the company-specific risk be diversified away by investing in both ConAgra Foods and Indofood Sukses 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 ConAgra Foods and Indofood Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Indofood Sukses Makmur, you can compare the effects of market volatilities on ConAgra Foods and Indofood Sukses 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 ConAgra Foods with a short position of Indofood Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Indofood Sukses.
Diversification Opportunities for ConAgra Foods and Indofood Sukses
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ConAgra and Indofood is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Indofood Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood Sukses Makmur and ConAgra Foods 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 ConAgra Foods are associated (or correlated) with Indofood Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood Sukses Makmur has no effect on the direction of ConAgra Foods i.e., ConAgra Foods and Indofood Sukses go up and down completely randomly.
Pair Corralation between ConAgra Foods and Indofood Sukses
Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Indofood Sukses. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 1.62 times less risky than Indofood Sukses. The stock trades about -0.01 of its potential returns per unit of risk. The Indofood Sukses Makmur is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,956 in Indofood Sukses Makmur on December 30, 2023 and sell it today you would earn a total of 79.00 from holding Indofood Sukses Makmur or generate 4.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 97.77% |
Values | Daily Returns |
ConAgra Foods vs. Indofood Sukses Makmur
Performance |
Timeline |
ConAgra Foods |
Indofood Sukses Makmur |
ConAgra Foods and Indofood Sukses Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ConAgra Foods and Indofood Sukses
The main advantage of trading using opposite ConAgra Foods and Indofood Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods position performs unexpectedly, Indofood Sukses 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 Sukses will offset losses from the drop in Indofood Sukses' long position.ConAgra Foods vs. Natural Alternatives International | ConAgra Foods vs. Natures Sunshine Products | ConAgra Foods vs. Nocera Inc | ConAgra Foods vs. Borealis Foods |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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