Correlation Between AECOM and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both AECOM and DAIRY FARM 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 AECOM and DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM and DAIRY FARM INTL, you can compare the effects of market volatilities on AECOM and DAIRY FARM 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 AECOM with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM and DAIRY FARM.
Diversification Opportunities for AECOM and DAIRY FARM
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AECOM and DAIRY is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AECOM and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and AECOM 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 AECOM are associated (or correlated) with DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of AECOM i.e., AECOM and DAIRY FARM go up and down completely randomly.
Pair Corralation between AECOM and DAIRY FARM
Assuming the 90 days horizon AECOM is expected to generate 0.67 times more return on investment than DAIRY FARM. However, AECOM is 1.5 times less risky than DAIRY FARM. It trades about 0.05 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.0 per unit of risk. If you would invest 7,796 in AECOM on September 13, 2024 and sell it today you would earn a total of 2,804 from holding AECOM or generate 35.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM vs. DAIRY FARM INTL
Performance |
| Timeline |
| AECOM |
| DAIRY FARM INTL |
AECOM and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM and DAIRY FARM
The main advantage of trading using opposite AECOM and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.| AECOM vs. DAIRY FARM INTL | AECOM vs. JJ SNACK FOODS | AECOM vs. Sterling Construction | AECOM vs. Collins Foods Limited |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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