Correlation Between Indofood Sukses and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Nomad Foods 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 Sukses and Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood Sukses Makmur and Nomad Foods, you can compare the effects of market volatilities on Indofood Sukses and Nomad Foods 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 Sukses with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Nomad Foods.
Diversification Opportunities for Indofood Sukses and Nomad Foods
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indofood and Nomad is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Indofood Sukses 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 Sukses Makmur are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Nomad Foods go up and down completely randomly.
Pair Corralation between Indofood Sukses and Nomad Foods
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the Nomad Foods. In addition to that, Indofood Sukses is 1.89 times more volatile than Nomad Foods. It trades about -0.17 of its total potential returns per unit of risk. Nomad Foods is currently generating about -0.13 per unit of volatility. If you would invest 1,936 in Nomad Foods on January 26, 2024 and sell it today you would lose (55.00) from holding Nomad Foods or give up 2.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Indofood Sukses Makmur vs. Nomad Foods
Performance |
Timeline |
Indofood Sukses Makmur |
Nomad Foods |
Indofood Sukses and Nomad Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indofood Sukses and Nomad Foods
The main advantage of trading using opposite Indofood Sukses and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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