Correlation Between Daios Plastics and Foodlink
Can any of the company-specific risk be diversified away by investing in both Daios Plastics and Foodlink 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 Daios Plastics and Foodlink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daios Plastics SA and Foodlink AE, you can compare the effects of market volatilities on Daios Plastics and Foodlink 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 Daios Plastics with a short position of Foodlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daios Plastics and Foodlink.
Diversification Opportunities for Daios Plastics and Foodlink
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daios and Foodlink is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Daios Plastics SA and Foodlink AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodlink AE and Daios Plastics 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 Daios Plastics SA are associated (or correlated) with Foodlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodlink AE has no effect on the direction of Daios Plastics i.e., Daios Plastics and Foodlink go up and down completely randomly.
Pair Corralation between Daios Plastics and Foodlink
Assuming the 90 days trading horizon Daios Plastics is expected to generate 2.19 times less return on investment than Foodlink. In addition to that, Daios Plastics is 1.41 times more volatile than Foodlink AE. It trades about 0.05 of its total potential returns per unit of risk. Foodlink AE is currently generating about 0.17 per unit of volatility. If you would invest 33.00 in Foodlink AE on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Foodlink AE or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daios Plastics SA vs. Foodlink AE
Performance |
| Timeline |
| Daios Plastics SA |
| Foodlink AE |
Daios Plastics and Foodlink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daios Plastics and Foodlink
The main advantage of trading using opposite Daios Plastics and Foodlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daios Plastics position performs unexpectedly, Foodlink 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 Foodlink will offset losses from the drop in Foodlink's long position.| Daios Plastics vs. Ktima Kostas Lazaridis | Daios Plastics vs. Centric Holdings SA | Daios Plastics vs. Trastor Real Estate | Daios Plastics vs. As Commercial Industrial |
| Foodlink vs. Frigoglass SAIC | Foodlink vs. Autohellas SA | Foodlink vs. Public Power | Foodlink vs. Intralot SA Integrated |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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