Correlation Between Farm Pride and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Chalice Mining 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 Chalice Mining 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 Chalice Mining Limited, you can compare the effects of market volatilities on Farm Pride and Chalice Mining 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 Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Chalice Mining.
Diversification Opportunities for Farm Pride and Chalice Mining
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farm and Chalice is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Farm Pride i.e., Farm Pride and Chalice Mining go up and down completely randomly.
Pair Corralation between Farm Pride and Chalice Mining
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 1.09 times more return on investment than Chalice Mining. However, Farm Pride is 1.09 times more volatile than Chalice Mining Limited. It trades about 0.06 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.04 per unit of risk. If you would invest 9.30 in Farm Pride Foods on December 4, 2024 and sell it today you would earn a total of 12.70 from holding Farm Pride Foods or generate 136.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Chalice Mining Limited
Performance |
| Timeline |
| Farm Pride Foods |
| Chalice Mining |
Farm Pride and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Chalice Mining
The main advantage of trading using opposite Farm Pride and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.| Farm Pride vs. Janison Education Group | Farm Pride vs. K2 Asset Management | Farm Pride vs. Iron Road | Farm Pride vs. Kip McGrath Education |
| Chalice Mining vs. Maggie Beer Holdings | Chalice Mining vs. Air New Zealand | Chalice Mining vs. Stelar Metals | Chalice Mining vs. Lykos Metals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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