Correlation Between GLG LIFE and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both GLG LIFE 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 GLG LIFE and DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and DAIRY FARM INTL, you can compare the effects of market volatilities on GLG LIFE 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 GLG LIFE with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and DAIRY FARM.
Diversification Opportunities for GLG LIFE and DAIRY FARM
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLG and DAIRY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and GLG 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 GLG LIFE TECH 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 INTL has no effect on the direction of GLG LIFE i.e., GLG LIFE and DAIRY FARM go up and down completely randomly.
Pair Corralation between GLG LIFE and DAIRY FARM
Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 22.75 times more return on investment than DAIRY FARM. However, GLG LIFE is 22.75 times more volatile than DAIRY FARM INTL. It trades about 0.08 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.0 per unit of risk. If you would invest 0.15 in GLG LIFE TECH on September 24, 2024 and sell it today you would earn a total of 1.85 from holding GLG LIFE TECH or generate 1233.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
GLG LIFE TECH vs. DAIRY FARM INTL
Performance |
| Timeline |
| GLG LIFE TECH |
| DAIRY FARM INTL |
GLG LIFE and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and DAIRY FARM
The main advantage of trading using opposite GLG LIFE and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE 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.| GLG LIFE vs. GFL ENVIRONM | GLG LIFE vs. BJs Restaurants | GLG LIFE vs. Darden Restaurants | GLG LIFE vs. Perma Fix Environmental Services |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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