Correlation Between EVS Broadcast and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both EVS Broadcast and Dairy Farm 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 EVS Broadcast and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVS Broadcast Equipment and Dairy Farm International, you can compare the effects of market volatilities on EVS Broadcast and Dairy Farm 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 EVS Broadcast with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and Dairy Farm.
Diversification Opportunities for EVS Broadcast and Dairy Farm
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EVS and Dairy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Dairy Farm go up and down completely randomly.
Pair Corralation between EVS Broadcast and Dairy Farm
Assuming the 90 days trading horizon EVS Broadcast is expected to generate 4.68 times less return on investment than Dairy Farm. But when comparing it to its historical volatility, EVS Broadcast Equipment is 1.25 times less risky than Dairy Farm. It trades about 0.06 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 210.00 in Dairy Farm International on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Dairy Farm International or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVS Broadcast Equipment vs. Dairy Farm International
Performance |
| Timeline |
| EVS Broadcast Equipment |
| Dairy Farm International |
EVS Broadcast and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVS Broadcast and Dairy Farm
The main advantage of trading using opposite EVS Broadcast and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVS Broadcast position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| EVS Broadcast vs. Apple Inc | EVS Broadcast vs. Apple Inc | EVS Broadcast vs. Apple Inc | EVS Broadcast vs. Apple Inc |
| Dairy Farm vs. TESCO PLC LS 0633333 | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. Origin Agritech |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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