Correlation Between DAIRY FARM and Penta Ocean
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and Penta Ocean 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 Penta Ocean 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 Penta Ocean Construction Co, you can compare the effects of market volatilities on DAIRY FARM and Penta Ocean 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 Penta Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Penta Ocean.
Diversification Opportunities for DAIRY FARM and Penta Ocean
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAIRY and Penta is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Ocean Construc 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 Penta Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Ocean Construc has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Penta Ocean go up and down completely randomly.
Pair Corralation between DAIRY FARM and Penta Ocean
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.97 times more return on investment than Penta Ocean. However, DAIRY FARM INTL is 1.03 times less risky than Penta Ocean. It trades about 0.34 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.09 per unit of risk. If you would invest 216.00 in DAIRY FARM INTL on August 29, 2024 and sell it today you would earn a total of 24.00 from holding DAIRY FARM INTL or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DAIRY FARM INTL vs. Penta Ocean Construction Co
Performance |
| Timeline |
| DAIRY FARM INTL |
| Penta Ocean Construc |
DAIRY FARM and Penta Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Penta Ocean
The main advantage of trading using opposite DAIRY FARM and Penta Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, Penta Ocean 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 Penta Ocean will offset losses from the drop in Penta Ocean's long position.| DAIRY FARM vs. Apple Inc | DAIRY FARM vs. Apple Inc | DAIRY FARM vs. Superior Plus Corp | DAIRY FARM vs. SIVERS SEMICONDUCTORS AB |
| Penta Ocean vs. Superior Plus Corp | Penta Ocean vs. NMI Holdings | Penta Ocean vs. Origin Agritech | Penta Ocean vs. SIVERS SEMICONDUCTORS AB |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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