Correlation Between ARN Media and Farm Pride
Can any of the company-specific risk be diversified away by investing in both ARN Media and Farm Pride 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 ARN Media and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and Farm Pride Foods, you can compare the effects of market volatilities on ARN Media and Farm Pride 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 ARN Media with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Farm Pride.
Diversification Opportunities for ARN Media and Farm Pride
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARN and Farm is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods and ARN Media 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 ARN Media Limited are associated (or correlated) with Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of ARN Media i.e., ARN Media and Farm Pride go up and down completely randomly.
Pair Corralation between ARN Media and Farm Pride
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Farm Pride. But the stock apears to be less risky and, when comparing its historical volatility, ARN Media Limited is 2.51 times less risky than Farm Pride. The stock trades about -0.18 of its potential returns per unit of risk. The Farm Pride Foods is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Farm Pride Foods on December 4, 2024 and sell it today you would earn a total of 7.00 from holding Farm Pride Foods or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Farm Pride Foods
Performance |
| Timeline |
| ARN Media Limited |
| Farm Pride Foods |
ARN Media and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Farm Pride
The main advantage of trading using opposite ARN Media and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.| ARN Media vs. Lunnon Metals | ARN Media vs. Red Hill Iron | ARN Media vs. Everest Metals | ARN Media vs. Asian Battery Metals |
| Farm Pride vs. Lunnon Metals | Farm Pride vs. Nex Metals Explorations | Farm Pride vs. Skycity Entertainment Group | Farm Pride vs. Sky Metals |
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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