Correlation Between InPlay Oil and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Dairy Farm International, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Dairy Farm.
Diversification Opportunities for InPlay Oil and Dairy Farm
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InPlay and Dairy is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Dairy Farm go up and down completely randomly.
Pair Corralation between InPlay Oil and Dairy Farm
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 2.35 times more return on investment than Dairy Farm. However, InPlay Oil is 2.35 times more volatile than Dairy Farm International. It trades about 0.16 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.01 per unit of risk. If you would invest 109.00 in InPlay Oil Corp on October 13, 2024 and sell it today you would earn a total of 11.00 from holding InPlay Oil Corp or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Dairy Farm International
Performance |
| Timeline |
| InPlay Oil Corp |
| Dairy Farm International |
InPlay Oil and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Dairy Farm
The main advantage of trading using opposite InPlay Oil and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.| InPlay Oil vs. MAGNUM MINING EXP | InPlay Oil vs. Calibre Mining Corp | InPlay Oil vs. SPORTING | InPlay Oil vs. JD SPORTS FASH |
| Dairy Farm vs. MARKET VECTR RETAIL | Dairy Farm vs. JIAHUA STORES | Dairy Farm vs. Gaming and Leisure | Dairy Farm vs. InPlay Oil Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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