Correlation Between Dairy Farm and HK Electric
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and HK Electric 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 HK Electric 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 HK Electric Investments, you can compare the effects of market volatilities on Dairy Farm and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and HK Electric.
Diversification Opportunities for Dairy Farm and HK Electric
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dairy and HKT is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Dairy Farm i.e., Dairy Farm and HK Electric go up and down completely randomly.
Pair Corralation between Dairy Farm and HK Electric
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the HK Electric. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.3 times less risky than HK Electric. The stock trades about -0.01 of its potential returns per unit of risk. The HK Electric Investments is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17.00 in HK Electric Investments on October 16, 2024 and sell it today you would earn a total of 48.00 from holding HK Electric Investments or generate 282.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dairy Farm International vs. HK Electric Investments
Performance |
| Timeline |
| Dairy Farm International |
| HK Electric Investments |
Dairy Farm and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and HK Electric
The main advantage of trading using opposite Dairy Farm and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| Dairy Farm vs. International Consolidated Airlines | Dairy Farm vs. SYSTEMAIR AB | Dairy Farm vs. Air New Zealand | Dairy Farm vs. FORWARD AIR P |
| HK Electric vs. De Grey Mining | HK Electric vs. MINCO SILVER | HK Electric vs. Globex Mining Enterprises | HK Electric vs. MOLSON RS BEVERAGE |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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