Correlation Between Food Life and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both Food Life and Commercial Vehicle 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 Commercial Vehicle 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 Commercial Vehicle Group, you can compare the effects of market volatilities on Food Life and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Commercial Vehicle.
Diversification Opportunities for Food Life and Commercial Vehicle
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Food and Commercial is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Food Life i.e., Food Life and Commercial Vehicle go up and down completely randomly.
Pair Corralation between Food Life and Commercial Vehicle
Assuming the 90 days horizon Food Life Companies is expected to generate 0.54 times more return on investment than Commercial Vehicle. However, Food Life Companies is 1.86 times less risky than Commercial Vehicle. It trades about 0.14 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.14 per unit of risk. If you would invest 1,680 in Food Life Companies on August 28, 2024 and sell it today you would earn a total of 260.00 from holding Food Life Companies or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Food Life Companies vs. Commercial Vehicle Group
Performance |
| Timeline |
| Food Life Companies |
| Commercial Vehicle |
Food Life and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Commercial Vehicle
The main advantage of trading using opposite Food Life and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings | Food Life vs. Origin Agritech | Food Life vs. SIVERS SEMICONDUCTORS AB |
| Commercial Vehicle vs. XLMedia PLC | Commercial Vehicle vs. Flutter Entertainment PLC | Commercial Vehicle vs. ANTA SPORTS PRODUCT | Commercial Vehicle vs. PT Global Mediacom |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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