Correlation Between Dairy Farm and H FARM
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and H 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 Dairy Farm and H FARM 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 H FARM SPA, you can compare the effects of market volatilities on Dairy Farm and H 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 Dairy Farm with a short position of H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and H FARM.
Diversification Opportunities for Dairy Farm and H FARM
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and 5JQ is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Dairy Farm i.e., Dairy Farm and H FARM go up and down completely randomly.
Pair Corralation between Dairy Farm and H FARM
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 0.42 times more return on investment than H FARM. However, Dairy Farm International is 2.36 times less risky than H FARM. It trades about 0.37 of its potential returns per unit of risk. H FARM SPA is currently generating about -0.3 per unit of risk. If you would invest 206.00 in Dairy Farm International on August 28, 2024 and sell it today you would earn a total of 28.00 from holding Dairy Farm International or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. H FARM SPA
Performance |
| Timeline |
| Dairy Farm International |
| H FARM SPA |
Dairy Farm and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and H FARM
The main advantage of trading using opposite Dairy Farm and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, H 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 H FARM will offset losses from the drop in H FARM's long position.| Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. Origin Agritech | Dairy Farm vs. SIVERS SEMICONDUCTORS AB |
| H FARM vs. Dairy Farm International | H FARM vs. JJ SNACK FOODS | H FARM vs. Cal Maine Foods | H FARM vs. TYSON FOODS A |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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