Correlation Between Standard Foods and Good Finance
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Good Finance 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 Standard Foods and Good Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Good Finance Securities, you can compare the effects of market volatilities on Standard Foods and Good Finance 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 Standard Foods with a short position of Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Good Finance.
Diversification Opportunities for Standard Foods and Good Finance
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Standard and Good is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities and Standard 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 Standard Foods Corp are associated (or correlated) with Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of Standard Foods i.e., Standard Foods and Good Finance go up and down completely randomly.
Pair Corralation between Standard Foods and Good Finance
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Good Finance. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 1.0 times less risky than Good Finance. The stock trades about -0.31 of its potential returns per unit of risk. The Good Finance Securities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Good Finance Securities on October 25, 2024 and sell it today you would earn a total of 20.00 from holding Good Finance Securities or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Good Finance Securities
Performance |
| Timeline |
| Standard Foods Corp |
| Good Finance Securities |
Standard Foods and Good Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Good Finance
The main advantage of trading using opposite Standard Foods and Good Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Good Finance 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 Good Finance will offset losses from the drop in Good Finance's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
| Good Finance vs. Ever Clear Environmental Eng | Good Finance vs. Quintain Steel Co | Good Finance vs. Chung Hung Steel | Good Finance vs. Standard 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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