Correlation Between DAIRY FARM and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on DAIRY FARM and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Summit Hotel.
Diversification Opportunities for DAIRY FARM and Summit Hotel
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAIRY and Summit is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Summit Hotel go up and down completely randomly.
Pair Corralation between DAIRY FARM and Summit Hotel
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.95 times more return on investment than Summit Hotel. However, DAIRY FARM INTL is 1.05 times less risky than Summit Hotel. It trades about -0.1 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.24 per unit of risk. If you would invest 216.00 in DAIRY FARM INTL on November 28, 2024 and sell it today you would lose (8.00) from holding DAIRY FARM INTL or give up 3.7% 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. Summit Hotel Properties
Performance |
| Timeline |
| DAIRY FARM INTL |
| Summit Hotel Properties |
DAIRY FARM and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Summit Hotel
The main advantage of trading using opposite DAIRY FARM and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| DAIRY FARM vs. CARSALESCOM | DAIRY FARM vs. Japan Medical Dynamic | DAIRY FARM vs. Genertec Universal Medical | DAIRY FARM vs. GEELY AUTOMOBILE |
| Summit Hotel vs. ELMOS SEMICONDUCTOR | Summit Hotel vs. Magnachip Semiconductor | Summit Hotel vs. Hua Hong Semiconductor | Summit Hotel vs. Renesas Electronics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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