Correlation Between Farm Pride and Aurum Resources
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Aurum Resources 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 Pride and Aurum Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farm Pride Foods and Aurum Resources, you can compare the effects of market volatilities on Farm Pride and Aurum Resources 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 Pride with a short position of Aurum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Aurum Resources.
Diversification Opportunities for Farm Pride and Aurum Resources
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farm and Aurum is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Aurum Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurum Resources and Farm Pride 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 Pride Foods are associated (or correlated) with Aurum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurum Resources has no effect on the direction of Farm Pride i.e., Farm Pride and Aurum Resources go up and down completely randomly.
Pair Corralation between Farm Pride and Aurum Resources
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 0.95 times more return on investment than Aurum Resources. However, Farm Pride Foods is 1.05 times less risky than Aurum Resources. It trades about -0.05 of its potential returns per unit of risk. Aurum Resources is currently generating about -0.14 per unit of risk. If you would invest 13.00 in Farm Pride Foods on September 12, 2024 and sell it today you would lose (1.00) from holding Farm Pride Foods or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Farm Pride Foods vs. Aurum Resources
Performance |
| Timeline |
| Farm Pride Foods |
| Aurum Resources |
Farm Pride and Aurum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Aurum Resources
The main advantage of trading using opposite Farm Pride and Aurum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Aurum Resources 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 Aurum Resources will offset losses from the drop in Aurum Resources' long position.| Farm Pride vs. Medibank Private | Farm Pride vs. Kkr Credit Income | Farm Pride vs. Aurelia Metals | Farm Pride vs. Centuria Industrial Reit |
| Aurum Resources vs. Premier Investments | Aurum Resources vs. Diversified United Investment | Aurum Resources vs. Auctus Alternative Investments | Aurum Resources vs. ARN Media 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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