Correlation Between DAIRY FARM and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on DAIRY FARM and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and THRACE PLASTICS.
Diversification Opportunities for DAIRY FARM and THRACE PLASTICS
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between DAIRY and THRACE is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between DAIRY FARM and THRACE PLASTICS
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the THRACE PLASTICS. In addition to that, DAIRY FARM is 2.12 times more volatile than THRACE PLASTICS. It trades about -0.08 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about -0.02 per unit of volatility. If you would invest 393.00 in THRACE PLASTICS on December 13, 2024 and sell it today you would lose (3.00) from holding THRACE PLASTICS or give up 0.76% 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. THRACE PLASTICS
Performance |
| Timeline |
| DAIRY FARM INTL |
| THRACE PLASTICS |
DAIRY FARM and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and THRACE PLASTICS
The main advantage of trading using opposite DAIRY FARM and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| DAIRY FARM vs. ARDAGH METAL PACDL 0001 | ||
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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