Correlation Between Plastic Omnium and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and DAIRY FARM INTL, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and DAIRY FARM.
Diversification Opportunities for Plastic Omnium and DAIRY FARM
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Plastic and DAIRY is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and DAIRY FARM go up and down completely randomly.
Pair Corralation between Plastic Omnium and DAIRY FARM
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 2.59 times more return on investment than DAIRY FARM. However, Plastic Omnium is 2.59 times more volatile than DAIRY FARM INTL. It trades about 0.17 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.04 per unit of risk. If you would invest 995.00 in Plastic Omnium on October 30, 2024 and sell it today you would earn a total of 90.00 from holding Plastic Omnium or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. DAIRY FARM INTL
Performance |
| Timeline |
| Plastic Omnium |
| DAIRY FARM INTL |
Plastic Omnium and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and DAIRY FARM
The main advantage of trading using opposite Plastic Omnium and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. Computershare Limited | Plastic Omnium vs. TreeHouse Foods | Plastic Omnium vs. Axfood AB | Plastic Omnium vs. Entravision Communications |
| DAIRY FARM vs. Urban Outfitters | DAIRY FARM vs. KIMBALL ELECTRONICS | DAIRY FARM vs. Sixt Leasing SE | DAIRY FARM vs. Nucletron Electronic Aktiengesellschaft |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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