Correlation Between Davis Commodities and High Tide
Can any of the company-specific risk be diversified away by investing in both Davis Commodities and High Tide 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 Davis Commodities and High Tide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Commodities Limited and High Tide, you can compare the effects of market volatilities on Davis Commodities and High Tide 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 Davis Commodities with a short position of High Tide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Commodities and High Tide.
Diversification Opportunities for Davis Commodities and High Tide
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Davis and High is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Davis Commodities Limited and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and Davis Commodities 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 Davis Commodities Limited are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of Davis Commodities i.e., Davis Commodities and High Tide go up and down completely randomly.
Pair Corralation between Davis Commodities and High Tide
Given the investment horizon of 90 days Davis Commodities Limited is expected to under-perform the High Tide. But the stock apears to be less risky and, when comparing its historical volatility, Davis Commodities Limited is 1.38 times less risky than High Tide. The stock trades about -0.27 of its potential returns per unit of risk. The High Tide is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 297.00 in High Tide on August 27, 2024 and sell it today you would lose (6.00) from holding High Tide or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Commodities Limited vs. High Tide
Performance |
| Timeline |
| Davis Commodities |
| High Tide |
Davis Commodities and High Tide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Commodities and High Tide
The main advantage of trading using opposite Davis Commodities and High Tide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Commodities position performs unexpectedly, High Tide 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 High Tide will offset losses from the drop in High Tide's long position.| Davis Commodities vs. Innovative Food Hldg | Davis Commodities vs. Calavo Growers | Davis Commodities vs. The Chefs Warehouse | Davis Commodities vs. AMCON Distributing |
| High Tide vs. Leafly Holdings | High Tide vs. SunLink Health Systems | High Tide vs. Kiaro Holdings Corp | High Tide vs. Leafly Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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