Correlation Between DAIRY FARM and Air Transport
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and Air Transport 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 Air Transport 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 Air Transport Services, you can compare the effects of market volatilities on DAIRY FARM and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Air Transport.
Diversification Opportunities for DAIRY FARM and Air Transport
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAIRY and Air is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Air Transport go up and down completely randomly.
Pair Corralation between DAIRY FARM and Air Transport
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the Air Transport. But the stock apears to be less risky and, when comparing its historical volatility, DAIRY FARM INTL is 1.39 times less risky than Air Transport. The stock trades about -0.01 of its potential returns per unit of risk. The Air Transport Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,320 in Air Transport Services on November 5, 2024 and sell it today you would lose (180.00) from holding Air Transport Services or give up 7.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. Air Transport Services
Performance |
| Timeline |
| DAIRY FARM INTL |
| Air Transport Services |
DAIRY FARM and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Air Transport
The main advantage of trading using opposite DAIRY FARM and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| DAIRY FARM vs. Salesforce | DAIRY FARM vs. National Retail Properties | DAIRY FARM vs. CANON MARKETING JP | DAIRY FARM vs. FAST RETAIL ADR |
| Air Transport vs. The Japan Steel | Air Transport vs. Daido Steel Co | Air Transport vs. Tianjin Capital Environmental | Air Transport vs. MGIC INVESTMENT |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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