Correlation Between DAIRY FARM and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and Goldman Sachs 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 Goldman Sachs 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 The Goldman Sachs, you can compare the effects of market volatilities on DAIRY FARM and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Goldman Sachs.
Diversification Opportunities for DAIRY FARM and Goldman Sachs
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAIRY and Goldman is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Goldman Sachs go up and down completely randomly.
Pair Corralation between DAIRY FARM and Goldman Sachs
Assuming the 90 days trading horizon DAIRY FARM is expected to generate 6.43 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, DAIRY FARM INTL is 1.17 times less risky than Goldman Sachs. It trades about 0.06 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 55,700 in The Goldman Sachs on November 8, 2024 and sell it today you would earn a total of 7,670 from holding The Goldman Sachs or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. The Goldman Sachs
Performance |
| Timeline |
| DAIRY FARM INTL |
| Goldman Sachs |
DAIRY FARM and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Goldman Sachs
The main advantage of trading using opposite DAIRY FARM and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| DAIRY FARM vs. Dentsply Sirona | DAIRY FARM vs. Nippon Steel | DAIRY FARM vs. Haverty Furniture Companies | DAIRY FARM vs. CALTAGIRONE EDITORE |
| Goldman Sachs vs. SOUTHWEST AIRLINES | Goldman Sachs vs. AEGEAN AIRLINES | Goldman Sachs vs. China Eastern Airlines | Goldman Sachs vs. International Consolidated Airlines |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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