Correlation Between Bio Gene and Retail Food
Can any of the company-specific risk be diversified away by investing in both Bio Gene and Retail Food 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 Bio Gene and Retail Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Gene Technology and Retail Food Group, you can compare the effects of market volatilities on Bio Gene and Retail Food 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 Bio Gene with a short position of Retail Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Gene and Retail Food.
Diversification Opportunities for Bio Gene and Retail Food
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bio and Retail is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bio Gene Technology and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group and Bio Gene 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 Bio Gene Technology are associated (or correlated) with Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Bio Gene i.e., Bio Gene and Retail Food go up and down completely randomly.
Pair Corralation between Bio Gene and Retail Food
Assuming the 90 days trading horizon Bio Gene Technology is expected to under-perform the Retail Food. In addition to that, Bio Gene is 1.53 times more volatile than Retail Food Group. It trades about -0.01 of its total potential returns per unit of risk. Retail Food Group is currently generating about 0.02 per unit of volatility. If you would invest 6.80 in Retail Food Group on September 2, 2024 and sell it today you would earn a total of 0.40 from holding Retail Food Group or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Gene Technology vs. Retail Food Group
Performance |
| Timeline |
| Bio Gene Technology |
| Retail Food Group |
Bio Gene and Retail Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Gene and Retail Food
The main advantage of trading using opposite Bio Gene and Retail Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Gene position performs unexpectedly, Retail Food 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 Retail Food will offset losses from the drop in Retail Food's long position.| Bio Gene vs. Northern Star Resources | Bio Gene vs. Evolution Mining | Bio Gene vs. Bluescope Steel | Bio Gene vs. Sandfire Resources NL |
| Retail Food vs. iShares Global Healthcare | Retail Food vs. Australian Dairy Farms | Retail Food vs. Adriatic Metals Plc | Retail Food vs. Australian Agricultural |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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