Correlation Between Food Life and CNVISION MEDIA
Can any of the company-specific risk be diversified away by investing in both Food Life and CNVISION MEDIA 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 Food Life and CNVISION MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and CNVISION MEDIA, you can compare the effects of market volatilities on Food Life and CNVISION MEDIA 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 Food Life with a short position of CNVISION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and CNVISION MEDIA.
Diversification Opportunities for Food Life and CNVISION MEDIA
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Food and CNVISION is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and CNVISION MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNVISION MEDIA and Food Life 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 Food Life Companies are associated (or correlated) with CNVISION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNVISION MEDIA has no effect on the direction of Food Life i.e., Food Life and CNVISION MEDIA go up and down completely randomly.
Pair Corralation between Food Life and CNVISION MEDIA
Assuming the 90 days horizon Food Life Companies is expected to generate 0.83 times more return on investment than CNVISION MEDIA. However, Food Life Companies is 1.21 times less risky than CNVISION MEDIA. It trades about 0.03 of its potential returns per unit of risk. CNVISION MEDIA is currently generating about -0.02 per unit of risk. If you would invest 1,740 in Food Life Companies on August 26, 2024 and sell it today you would earn a total of 200.00 from holding Food Life Companies or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. CNVISION MEDIA
Performance |
| Timeline |
| Food Life Companies |
| CNVISION MEDIA |
Food Life and CNVISION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and CNVISION MEDIA
The main advantage of trading using opposite Food Life and CNVISION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, CNVISION MEDIA 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 CNVISION MEDIA will offset losses from the drop in CNVISION MEDIA's long position.| Food Life vs. Take Two Interactive Software | Food Life vs. Universal Display | Food Life vs. SIMS METAL MGT | Food Life vs. Unity Software |
| CNVISION MEDIA vs. Apple Inc | CNVISION MEDIA vs. Apple Inc | CNVISION MEDIA vs. Apple Inc | CNVISION MEDIA vs. Apple Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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