Correlation Between Dairy Farm and RTL Group
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and RTL Group 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 RTL Group 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 RTL Group SA, you can compare the effects of market volatilities on Dairy Farm and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and RTL Group.
Diversification Opportunities for Dairy Farm and RTL Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and RTL is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Dairy Farm i.e., Dairy Farm and RTL Group go up and down completely randomly.
Pair Corralation between Dairy Farm and RTL Group
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 1.71 times more return on investment than RTL Group. However, Dairy Farm is 1.71 times more volatile than RTL Group SA. It trades about 0.0 of its potential returns per unit of risk. RTL Group SA is currently generating about -0.06 per unit of risk. If you would invest 275.00 in Dairy Farm International on August 31, 2024 and sell it today you would lose (47.00) from holding Dairy Farm International or give up 17.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Dairy Farm International vs. RTL Group SA
Performance |
| Timeline |
| Dairy Farm International |
| RTL Group SA |
Dairy Farm and RTL Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and RTL Group
The main advantage of trading using opposite Dairy Farm and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group'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 |
| RTL Group vs. Magnachip Semiconductor | RTL Group vs. Dairy Farm International | RTL Group vs. MagnaChip Semiconductor Corp | RTL Group vs. AUSNUTRIA DAIRY |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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