Correlation Between Centuria Industrial and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Centuria Industrial 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 Centuria Industrial and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centuria Industrial Reit and Farm Pride Foods, you can compare the effects of market volatilities on Centuria Industrial 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 Centuria Industrial with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centuria Industrial and Farm Pride.
Diversification Opportunities for Centuria Industrial and Farm Pride
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centuria and Farm is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit 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 Centuria Industrial 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 Centuria Industrial Reit 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 Centuria Industrial i.e., Centuria Industrial and Farm Pride go up and down completely randomly.
Pair Corralation between Centuria Industrial and Farm Pride
Assuming the 90 days trading horizon Centuria Industrial Reit is expected to generate 0.15 times more return on investment than Farm Pride. However, Centuria Industrial Reit is 6.8 times less risky than Farm Pride. It trades about -0.31 of its potential returns per unit of risk. Farm Pride Foods is currently generating about -0.05 per unit of risk. If you would invest 303.00 in Centuria Industrial Reit on September 13, 2024 and sell it today you would lose (15.00) from holding Centuria Industrial Reit or give up 4.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centuria Industrial Reit vs. Farm Pride Foods
Performance |
| Timeline |
| Centuria Industrial Reit |
| Farm Pride Foods |
Centuria Industrial and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centuria Industrial and Farm Pride
The main advantage of trading using opposite Centuria Industrial and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centuria Industrial 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.| Centuria Industrial vs. Auctus Alternative Investments | Centuria Industrial vs. Carawine Resources Limited | Centuria Industrial vs. Mirrabooka Investments | Centuria Industrial vs. Embark Education Group |
| Farm Pride vs. Aneka Tambang Tbk | Farm Pride vs. Macquarie Group | Farm Pride vs. Macquarie Group Ltd | Farm Pride vs. Challenger |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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