Correlation Between Collins Foods and Industrial
Can any of the company-specific risk be diversified away by investing in both Collins Foods 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 Collins Foods and Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and Industrial and Commercial, you can compare the effects of market volatilities on Collins Foods 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 Collins Foods with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Industrial.
Diversification Opportunities for Collins Foods and Industrial
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Collins and Industrial is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited 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 Collins Foods 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 Collins Foods Limited 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 Collins Foods i.e., Collins Foods and Industrial go up and down completely randomly.
Pair Corralation between Collins Foods and Industrial
Assuming the 90 days horizon Collins Foods Limited is expected to under-perform the Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods Limited is 7.16 times less risky than Industrial. The stock trades about -0.46 of its potential returns per unit of risk. The Industrial and Commercial is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 45.00 in Industrial and Commercial on October 7, 2024 and sell it today you would earn a total of 17.00 from holding Industrial and Commercial or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods Limited vs. Industrial and Commercial
Performance |
| Timeline |
| Collins Foods Limited |
| Industrial and Commercial |
Collins Foods and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Industrial
The main advantage of trading using opposite Collins Foods and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods 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.| Collins Foods vs. Superior Plus Corp | Collins Foods vs. NMI Holdings | Collins Foods vs. SIVERS SEMICONDUCTORS AB | Collins Foods vs. Talanx AG |
| Industrial vs. Magnachip Semiconductor | Industrial vs. Tower Semiconductor | Industrial vs. Dave Busters Entertainment | Industrial vs. Nordic Semiconductor ASA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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