Correlation Between Dairy Farm and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on Dairy Farm and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and EVS Broadcast.
Diversification Opportunities for Dairy Farm and EVS Broadcast
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dairy and EVS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Dairy Farm i.e., Dairy Farm and EVS Broadcast go up and down completely randomly.
Pair Corralation between Dairy Farm and EVS Broadcast
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 1.25 times more return on investment than EVS Broadcast. However, Dairy Farm is 1.25 times more volatile than EVS Broadcast Equipment. It trades about 0.21 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.06 per unit of risk. If you would invest 210.00 in Dairy Farm International on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Dairy Farm International or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. EVS Broadcast Equipment
Performance |
| Timeline |
| Dairy Farm International |
| EVS Broadcast Equipment |
Dairy Farm and EVS Broadcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and EVS Broadcast
The main advantage of trading using opposite Dairy Farm and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.| Dairy Farm vs. TESCO PLC LS 0633333 | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. Origin Agritech |
| EVS Broadcast vs. Apple Inc | EVS Broadcast vs. Apple Inc | EVS Broadcast vs. Apple Inc | EVS Broadcast vs. Apple Inc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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