Correlation Between FAN MILK and STANDARD CHARTERED
Can any of the company-specific risk be diversified away by investing in both FAN MILK and STANDARD CHARTERED 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 FAN MILK and STANDARD CHARTERED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAN MILK LTD and STANDARD CHARTERED BANK, you can compare the effects of market volatilities on FAN MILK and STANDARD CHARTERED 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 FAN MILK with a short position of STANDARD CHARTERED. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAN MILK and STANDARD CHARTERED.
Diversification Opportunities for FAN MILK and STANDARD CHARTERED
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FAN and STANDARD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FAN MILK LTD and STANDARD CHARTERED BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD CHARTERED BANK and FAN MILK 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 FAN MILK LTD are associated (or correlated) with STANDARD CHARTERED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD CHARTERED BANK has no effect on the direction of FAN MILK i.e., FAN MILK and STANDARD CHARTERED go up and down completely randomly.
Pair Corralation between FAN MILK and STANDARD CHARTERED
Assuming the 90 days trading horizon FAN MILK LTD is expected to generate 1.29 times more return on investment than STANDARD CHARTERED. However, FAN MILK is 1.29 times more volatile than STANDARD CHARTERED BANK. It trades about 0.03 of its potential returns per unit of risk. STANDARD CHARTERED BANK is currently generating about 0.02 per unit of risk. If you would invest 300.00 in FAN MILK LTD on September 2, 2024 and sell it today you would earn a total of 70.00 from holding FAN MILK LTD or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAN MILK LTD vs. STANDARD CHARTERED BANK
Performance |
| Timeline |
| FAN MILK LTD |
| STANDARD CHARTERED BANK |
FAN MILK and STANDARD CHARTERED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAN MILK and STANDARD CHARTERED
The main advantage of trading using opposite FAN MILK and STANDARD CHARTERED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAN MILK position performs unexpectedly, STANDARD CHARTERED 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 STANDARD CHARTERED will offset losses from the drop in STANDARD CHARTERED's long position.| FAN MILK vs. SIC INSURANCE ANY | FAN MILK vs. AGRICULTURAL DEVELOPMENT BANK | FAN MILK vs. STANDARD CHARTERED BANK | FAN MILK vs. REPUBLIC BANK 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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