Correlation Between Food Life and ASOS PLC
Can any of the company-specific risk be diversified away by investing in both Food Life and ASOS PLC 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 ASOS PLC 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 ASOS PLC, you can compare the effects of market volatilities on Food Life and ASOS PLC 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 ASOS PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and ASOS PLC.
Diversification Opportunities for Food Life and ASOS PLC
Excellent diversification
The 3 months correlation between Food and ASOS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and ASOS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS PLC 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 ASOS PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS PLC has no effect on the direction of Food Life i.e., Food Life and ASOS PLC go up and down completely randomly.
Pair Corralation between Food Life and ASOS PLC
Assuming the 90 days horizon Food Life Companies is expected to generate 0.5 times more return on investment than ASOS PLC. However, Food Life Companies is 2.0 times less risky than ASOS PLC. It trades about 0.45 of its potential returns per unit of risk. ASOS PLC is currently generating about 0.09 per unit of risk. If you would invest 1,780 in Food Life Companies on September 5, 2024 and sell it today you would earn a total of 380.00 from holding Food Life Companies or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. ASOS PLC
Performance |
| Timeline |
| Food Life Companies |
| ASOS PLC |
Food Life and ASOS PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and ASOS PLC
The main advantage of trading using opposite Food Life and ASOS PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, ASOS PLC 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 ASOS PLC will offset losses from the drop in ASOS PLC's long position.| Food Life vs. McDonalds | Food Life vs. Chipotle Mexican Grill | Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings |
| ASOS PLC vs. Plastic Omnium | ASOS PLC vs. Sumitomo Rubber Industries | ASOS PLC vs. Hyster Yale Materials Handling | ASOS PLC vs. EEDUCATION ALBERT AB |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |