Correlation Between Dairy Farm and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on Dairy Farm and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and SWISS WATER.
Diversification Opportunities for Dairy Farm and SWISS WATER
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dairy and SWISS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Dairy Farm i.e., Dairy Farm and SWISS WATER go up and down completely randomly.
Pair Corralation between Dairy Farm and SWISS WATER
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 0.62 times more return on investment than SWISS WATER. However, Dairy Farm International is 1.61 times less risky than SWISS WATER. It trades about -0.01 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.19 per unit of risk. If you would invest 210.00 in Dairy Farm International on October 31, 2024 and sell it today you would lose (2.00) from holding Dairy Farm International or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| Dairy Farm International |
| SWISS WATER DECAFFCOFFEE |
Dairy Farm and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and SWISS WATER
The main advantage of trading using opposite Dairy Farm and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| Dairy Farm vs. JSC Halyk bank | Dairy Farm vs. Zoom Video Communications | Dairy Farm vs. Warner Music Group | Dairy Farm vs. Commonwealth Bank of |
| SWISS WATER vs. Taylor Morrison Home | SWISS WATER vs. Sunny Optical Technology | SWISS WATER vs. VARIOUS EATERIES LS | SWISS WATER vs. Focus Home Interactive |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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