Correlation Between CN MODERN and ASSOC BR
Can any of the company-specific risk be diversified away by investing in both CN MODERN and ASSOC BR 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 CN MODERN and ASSOC BR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and ASSOC BR FOODS, you can compare the effects of market volatilities on CN MODERN and ASSOC BR 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 CN MODERN with a short position of ASSOC BR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and ASSOC BR.
Diversification Opportunities for CN MODERN and ASSOC BR
Weak diversification
The 3 months correlation between 07M and ASSOC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and ASSOC BR FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSOC BR FOODS and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with ASSOC BR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSOC BR FOODS has no effect on the direction of CN MODERN i.e., CN MODERN and ASSOC BR go up and down completely randomly.
Pair Corralation between CN MODERN and ASSOC BR
Assuming the 90 days trading horizon CN MODERN is expected to generate 1.3 times less return on investment than ASSOC BR. In addition to that, CN MODERN is 1.82 times more volatile than ASSOC BR FOODS. It trades about 0.03 of its total potential returns per unit of risk. ASSOC BR FOODS is currently generating about 0.07 per unit of volatility. If you would invest 1,714 in ASSOC BR FOODS on September 14, 2024 and sell it today you would earn a total of 946.00 from holding ASSOC BR FOODS or generate 55.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. ASSOC BR FOODS
Performance |
| Timeline |
| CN MODERN DAIRY |
| ASSOC BR FOODS |
CN MODERN and ASSOC BR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and ASSOC BR
The main advantage of trading using opposite CN MODERN and ASSOC BR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, ASSOC BR 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 ASSOC BR will offset losses from the drop in ASSOC BR's long position.The idea behind CN MODERN DAIRY and ASSOC BR 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.| ASSOC BR vs. Hormel Foods | ASSOC BR vs. Superior Plus Corp | ASSOC BR vs. SIVERS SEMICONDUCTORS AB | ASSOC BR vs. NorAm Drilling AS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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