Correlation Between FARM 51 and Major Drilling
Can any of the company-specific risk be diversified away by investing in both FARM 51 and Major Drilling 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 FARM 51 and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and Major Drilling Group, you can compare the effects of market volatilities on FARM 51 and Major Drilling 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 FARM 51 with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Major Drilling.
Diversification Opportunities for FARM 51 and Major Drilling
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FARM and Major is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and FARM 51 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 FARM 51 GROUP are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of FARM 51 i.e., FARM 51 and Major Drilling go up and down completely randomly.
Pair Corralation between FARM 51 and Major Drilling
Assuming the 90 days horizon FARM 51 GROUP is expected to generate 1.28 times more return on investment than Major Drilling. However, FARM 51 is 1.28 times more volatile than Major Drilling Group. It trades about 0.03 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.02 per unit of risk. If you would invest 302.00 in FARM 51 GROUP on October 26, 2024 and sell it today you would earn a total of 5.00 from holding FARM 51 GROUP or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. Major Drilling Group
Performance |
| Timeline |
| FARM 51 GROUP |
| Major Drilling Group |
FARM 51 and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and Major Drilling
The main advantage of trading using opposite FARM 51 and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| FARM 51 vs. GEAR4MUSIC LS 10 | FARM 51 vs. BANKINTER ADR 2007 | FARM 51 vs. Check Point Software | FARM 51 vs. Kingdee International Software |
| Major Drilling vs. Gaztransport Technigaz SA | Major Drilling vs. FRACTAL GAMING GROUP | Major Drilling vs. TRAINLINE PLC LS | Major Drilling vs. Gold Road Resources |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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