Correlation Between Dairy Farm and NN Group
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and NN Group 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 Dairy Farm and NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and NN Group NV, you can compare the effects of market volatilities on Dairy Farm and NN Group 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 Dairy Farm with a short position of NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and NN Group.
Diversification Opportunities for Dairy Farm and NN Group
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dairy and 2NN is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Dairy Farm 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 Dairy Farm International are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Dairy Farm i.e., Dairy Farm and NN Group go up and down completely randomly.
Pair Corralation between Dairy Farm and NN Group
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the NN Group. In addition to that, Dairy Farm is 2.56 times more volatile than NN Group NV. It trades about -0.1 of its total potential returns per unit of risk. NN Group NV is currently generating about -0.03 per unit of volatility. If you would invest 4,268 in NN Group NV on October 8, 2024 and sell it today you would lose (15.00) from holding NN Group NV or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. NN Group NV
Performance |
| Timeline |
| Dairy Farm International |
| NN Group NV |
Dairy Farm and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and NN Group
The main advantage of trading using opposite Dairy Farm and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| Dairy Farm vs. ULTRA CLEAN HLDGS | Dairy Farm vs. THAI BEVERAGE | Dairy Farm vs. UNITED RENTALS | Dairy Farm vs. ALERION CLEANPOWER |
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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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