Correlation Between Dairy Farm and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on Dairy Farm and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Evolution Mining.
Diversification Opportunities for Dairy Farm and Evolution Mining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dairy and Evolution is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Dairy Farm i.e., Dairy Farm and Evolution Mining go up and down completely randomly.
Pair Corralation between Dairy Farm and Evolution Mining
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 2.0 times more return on investment than Evolution Mining. However, Dairy Farm is 2.0 times more volatile than Evolution Mining Limited. It trades about 0.15 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.08 per unit of risk. If you would invest 189.00 in Dairy Farm International on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Dairy Farm International or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Evolution Mining Limited
Performance |
| Timeline |
| Dairy Farm International |
| Evolution Mining |
Dairy Farm and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Evolution Mining
The main advantage of trading using opposite Dairy Farm and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining'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 |
| Evolution Mining vs. Franco Nevada | Evolution Mining vs. Agnico Eagle Mines | Evolution Mining vs. Superior Plus Corp | Evolution Mining vs. NMI Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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