Correlation Between Farm Pride and Centuria Capital
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Centuria Capital 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 Centuria Capital 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 Centuria Capital, you can compare the effects of market volatilities on Farm Pride and Centuria Capital 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 Centuria Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Centuria Capital.
Diversification Opportunities for Farm Pride and Centuria Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farm and Centuria is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Centuria Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centuria Capital 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 Centuria Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centuria Capital has no effect on the direction of Farm Pride i.e., Farm Pride and Centuria Capital go up and down completely randomly.
Pair Corralation between Farm Pride and Centuria Capital
Assuming the 90 days trading horizon Farm Pride is expected to generate 2.54 times less return on investment than Centuria Capital. In addition to that, Farm Pride is 2.64 times more volatile than Centuria Capital. It trades about 0.01 of its total potential returns per unit of risk. Centuria Capital is currently generating about 0.07 per unit of volatility. If you would invest 147.00 in Centuria Capital on September 4, 2024 and sell it today you would earn a total of 48.00 from holding Centuria Capital or generate 32.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Centuria Capital
Performance |
| Timeline |
| Farm Pride Foods |
| Centuria Capital |
Farm Pride and Centuria Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Centuria Capital
The main advantage of trading using opposite Farm Pride and Centuria Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Centuria Capital 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 Centuria Capital will offset losses from the drop in Centuria Capital's long position.| Farm Pride vs. Audio Pixels Holdings | Farm Pride vs. Norwest Minerals | Farm Pride vs. Lindian Resources | Farm Pride vs. Resource Base |
| Centuria Capital vs. Health and Plant | Centuria Capital vs. Sonic Healthcare | Centuria Capital vs. Medical Developments International | Centuria Capital vs. Regis Healthcare |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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