Correlation Between Aryzta AG and A2 Milk
Can any of the company-specific risk be diversified away by investing in both Aryzta AG and A2 Milk 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 Aryzta AG and A2 Milk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aryzta AG PK and The a2 Milk, you can compare the effects of market volatilities on Aryzta AG and A2 Milk 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 Aryzta AG with a short position of A2 Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and A2 Milk.
Diversification Opportunities for Aryzta AG and A2 Milk
Very weak diversification
The 3 months correlation between Aryzta and ACOPF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and The a2 Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on a2 Milk and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with A2 Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of a2 Milk has no effect on the direction of Aryzta AG i.e., Aryzta AG and A2 Milk go up and down completely randomly.
Pair Corralation between Aryzta AG and A2 Milk
Assuming the 90 days horizon Aryzta AG PK is expected to generate 0.71 times more return on investment than A2 Milk. However, Aryzta AG PK is 1.41 times less risky than A2 Milk. It trades about -0.12 of its potential returns per unit of risk. The a2 Milk is currently generating about -0.27 per unit of risk. If you would invest 90.00 in Aryzta AG PK on August 24, 2024 and sell it today you would lose (7.00) from holding Aryzta AG PK or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aryzta AG PK vs. The a2 Milk
Performance |
| Timeline |
| Aryzta AG PK |
| a2 Milk |
Aryzta AG and A2 Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aryzta AG and A2 Milk
The main advantage of trading using opposite Aryzta AG and A2 Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG position performs unexpectedly, A2 Milk 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 A2 Milk will offset losses from the drop in A2 Milk's long position.| Aryzta AG vs. Artisan Consumer Goods | Aryzta AG vs. Altavoz Entertainment | Aryzta AG vs. Avi Ltd ADR | Aryzta AG vs. The a2 Milk |
| A2 Milk vs. Artisan Consumer Goods | A2 Milk vs. Altavoz Entertainment | A2 Milk vs. Avi Ltd ADR | A2 Milk vs. Aryzta AG PK |
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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