Correlation Between DBS Group and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both DBS Group and Dairy Farm 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 DBS Group and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and Dairy Farm International, you can compare the effects of market volatilities on DBS Group and Dairy Farm 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 DBS Group with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and Dairy Farm.
Diversification Opportunities for DBS Group and Dairy Farm
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DBS and Dairy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and DBS Group 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 DBS Group Holdings are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of DBS Group i.e., DBS Group and Dairy Farm go up and down completely randomly.
Pair Corralation between DBS Group and Dairy Farm
Assuming the 90 days trading horizon DBS Group Holdings is expected to generate 0.48 times more return on investment than Dairy Farm. However, DBS Group Holdings is 2.07 times less risky than Dairy Farm. It trades about 0.16 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.07 per unit of risk. If you would invest 2,089 in DBS Group Holdings on September 3, 2024 and sell it today you would earn a total of 911.00 from holding DBS Group Holdings or generate 43.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBS Group Holdings vs. Dairy Farm International
Performance |
| Timeline |
| DBS Group Holdings |
| Dairy Farm International |
DBS Group and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBS Group and Dairy Farm
The main advantage of trading using opposite DBS Group and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| DBS Group vs. DFS Furniture PLC | DBS Group vs. GLG LIFE TECH | DBS Group vs. CENTURIA OFFICE REIT | DBS Group vs. Lion Biotechnologies |
| Dairy Farm vs. BRIT AMER TOBACCO | Dairy Farm vs. Pentair plc | Dairy Farm vs. IMPERIAL TOBACCO | Dairy Farm vs. Alaska Air Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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