Correlation Between DFS Furniture and New HopeLimited
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and New HopeLimited 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 DFS Furniture and New HopeLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and New Hope, you can compare the effects of market volatilities on DFS Furniture and New HopeLimited 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 DFS Furniture with a short position of New HopeLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and New HopeLimited.
Diversification Opportunities for DFS Furniture and New HopeLimited
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DFS and New is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New HopeLimited and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with New HopeLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New HopeLimited has no effect on the direction of DFS Furniture i.e., DFS Furniture and New HopeLimited go up and down completely randomly.
Pair Corralation between DFS Furniture and New HopeLimited
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.67 times more return on investment than New HopeLimited. However, DFS Furniture PLC is 1.49 times less risky than New HopeLimited. It trades about 0.08 of its potential returns per unit of risk. New Hope is currently generating about 0.0 per unit of risk. If you would invest 156.00 in DFS Furniture PLC on September 5, 2024 and sell it today you would earn a total of 5.00 from holding DFS Furniture PLC or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
DFS Furniture PLC vs. New Hope
Performance |
| Timeline |
| DFS Furniture PLC |
| New HopeLimited |
DFS Furniture and New HopeLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and New HopeLimited
The main advantage of trading using opposite DFS Furniture and New HopeLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, New HopeLimited 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 New HopeLimited will offset losses from the drop in New HopeLimited's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| New HopeLimited vs. Astral Foods Limited | New HopeLimited vs. Autohome ADR | New HopeLimited vs. CSSC Offshore Marine | New HopeLimited vs. DFS Furniture PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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