Correlation Between Dairy Farm and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and SYSTEMAIR 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 SYSTEMAIR 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 SYSTEMAIR AB, you can compare the effects of market volatilities on Dairy Farm and SYSTEMAIR 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 SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and SYSTEMAIR.
Diversification Opportunities for Dairy Farm and SYSTEMAIR
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dairy and SYSTEMAIR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Dairy Farm i.e., Dairy Farm and SYSTEMAIR go up and down completely randomly.
Pair Corralation between Dairy Farm and SYSTEMAIR
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 1.78 times more return on investment than SYSTEMAIR. However, Dairy Farm is 1.78 times more volatile than SYSTEMAIR AB. It trades about 0.16 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.09 per unit of risk. If you would invest 151.00 in Dairy Farm International on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Dairy Farm International or generate 44.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. SYSTEMAIR AB
Performance |
| Timeline |
| Dairy Farm International |
| SYSTEMAIR AB |
Dairy Farm and SYSTEMAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and SYSTEMAIR
The main advantage of trading using opposite Dairy Farm and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.| Dairy Farm vs. Motorcar Parts of | Dairy Farm vs. Playtech plc | Dairy Farm vs. ePlay Digital | Dairy Farm vs. PLAYTIKA HOLDING DL 01 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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