Correlation Between Dairy Farm and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE, you can compare the effects of market volatilities on Dairy Farm and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and GEELY AUTOMOBILE.
Diversification Opportunities for Dairy Farm and GEELY AUTOMOBILE
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dairy and GEELY is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of Dairy Farm i.e., Dairy Farm and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between Dairy Farm and GEELY AUTOMOBILE
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 0.66 times more return on investment than GEELY AUTOMOBILE. However, Dairy Farm International is 1.51 times less risky than GEELY AUTOMOBILE. It trades about 0.24 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.08 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 20.00 from holding Dairy Farm International or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. GEELY AUTOMOBILE
Performance |
| Timeline |
| Dairy Farm International |
| GEELY AUTOMOBILE |
Dairy Farm and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and GEELY AUTOMOBILE
The main advantage of trading using opposite Dairy Farm and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE'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 |
| GEELY AUTOMOBILE vs. SIVERS SEMICONDUCTORS AB | GEELY AUTOMOBILE vs. Darden Restaurants | GEELY AUTOMOBILE vs. Reliance Steel Aluminum | GEELY AUTOMOBILE vs. Q2M Managementberatung AG |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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