Correlation Between Dairy Farm and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on Dairy Farm and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and SENECA FOODS-A.
Diversification Opportunities for Dairy Farm and SENECA FOODS-A
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dairy and SENECA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Dairy Farm i.e., Dairy Farm and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Dairy Farm and SENECA FOODS-A
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 1.65 times more return on investment than SENECA FOODS-A. However, Dairy Farm is 1.65 times more volatile than SENECA FOODS A. It trades about 0.15 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.13 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. SENECA FOODS A
Performance |
| Timeline |
| Dairy Farm International |
| SENECA FOODS A |
Dairy Farm and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and SENECA FOODS-A
The main advantage of trading using opposite Dairy Farm and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A'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 |
| SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Microsoft | SENECA FOODS-A vs. Microsoft |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |