Correlation Between H FARM and Industrial
Can any of the company-specific risk be diversified away by investing in both H FARM and Industrial 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 H FARM and Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H FARM SPA and Industrial and Commercial, you can compare the effects of market volatilities on H FARM and Industrial 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 H FARM with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and Industrial.
Diversification Opportunities for H FARM and Industrial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 5JQ and Industrial is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and H FARM 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 H FARM SPA are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of H FARM i.e., H FARM and Industrial go up and down completely randomly.
Pair Corralation between H FARM and Industrial
Assuming the 90 days horizon H FARM is expected to generate 1.63 times less return on investment than Industrial. In addition to that, H FARM is 1.94 times more volatile than Industrial and Commercial. It trades about 0.06 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.2 per unit of volatility. If you would invest 47.00 in Industrial and Commercial on November 30, 2024 and sell it today you would earn a total of 22.00 from holding Industrial and Commercial or generate 46.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H FARM SPA vs. Industrial and Commercial
Performance |
| Timeline |
| H FARM SPA |
| Industrial and Commercial |
H FARM and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H FARM and Industrial
The main advantage of trading using opposite H FARM and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| H FARM vs. MOLSON RS BEVERAGE | H FARM vs. Check Point Software | H FARM vs. EBRO FOODS | H FARM vs. Moneysupermarket Group PLC |
| Industrial vs. ASURE SOFTWARE | Industrial vs. AXWAY SOFTWARE EO | Industrial vs. Entravision Communications | Industrial vs. Spirent Communications plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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