Correlation Between Dairy Farm and Carrefour
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and Carrefour 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 Carrefour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Carrefour SA PK, you can compare the effects of market volatilities on Dairy Farm and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Carrefour.
Diversification Opportunities for Dairy Farm and Carrefour
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and Carrefour is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Carrefour SA PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA PK 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 International are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA PK has no effect on the direction of Dairy Farm i.e., Dairy Farm and Carrefour go up and down completely randomly.
Pair Corralation between Dairy Farm and Carrefour
Assuming the 90 days horizon Dairy Farm International is expected to generate 0.04 times more return on investment than Carrefour. However, Dairy Farm International is 22.96 times less risky than Carrefour. It trades about -0.22 of its potential returns per unit of risk. Carrefour SA PK is currently generating about -0.05 per unit of risk. If you would invest 219.00 in Dairy Farm International on August 28, 2024 and sell it today you would lose (1.00) from holding Dairy Farm International or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Carrefour SA PK
Performance |
| Timeline |
| Dairy Farm International |
| Carrefour SA PK |
Dairy Farm and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Carrefour
The main advantage of trading using opposite Dairy Farm and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| Dairy Farm vs. Natural Grocers by | Dairy Farm vs. Grocery Outlet Holding | Dairy Farm vs. Village Super Market | Dairy Farm vs. Ingles Markets Incorporated |
| Carrefour vs. Natural Grocers by | Carrefour vs. Grocery Outlet Holding | Carrefour vs. Village Super Market | Carrefour vs. Ingles Markets Incorporated |
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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