Correlation Between DAIRY FARM and KAGA EL
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and KAGA EL 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 KAGA EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and KAGA EL LTD, you can compare the effects of market volatilities on DAIRY FARM and KAGA EL 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 KAGA EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and KAGA EL.
Diversification Opportunities for DAIRY FARM and KAGA EL
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between DAIRY and KAGA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and KAGA EL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAGA EL LTD 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 INTL are associated (or correlated) with KAGA EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAGA EL LTD has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and KAGA EL go up and down completely randomly.
Pair Corralation between DAIRY FARM and KAGA EL
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the KAGA EL. In addition to that, DAIRY FARM is 1.11 times more volatile than KAGA EL LTD. It trades about -0.01 of its total potential returns per unit of risk. KAGA EL LTD is currently generating about 0.0 per unit of volatility. If you would invest 1,750 in KAGA EL LTD on November 29, 2024 and sell it today you would lose (100.00) from holding KAGA EL LTD or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. KAGA EL LTD
Performance |
| Timeline |
| DAIRY FARM INTL |
| KAGA EL LTD |
DAIRY FARM and KAGA EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and KAGA EL
The main advantage of trading using opposite DAIRY FARM and KAGA EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, KAGA EL 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 KAGA EL will offset losses from the drop in KAGA EL's long position.| DAIRY FARM vs. National Health Investors | DAIRY FARM vs. betterU Education Corp | DAIRY FARM vs. Xinhua Winshare Publishing | DAIRY FARM vs. Cardinal Health |
| KAGA EL vs. Chengdu PUTIAN Telecommunications | KAGA EL vs. Computer And Technologies | KAGA EL vs. Hemisphere Energy Corp | KAGA EL vs. Cogent Communications 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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