Correlation Between Farm Pride and Dicker Data
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Dicker Data 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 Dicker Data 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 Dicker Data, you can compare the effects of market volatilities on Farm Pride and Dicker Data 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 Dicker Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Dicker Data.
Diversification Opportunities for Farm Pride and Dicker Data
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farm and Dicker is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Dicker Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicker Data 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 Dicker Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicker Data has no effect on the direction of Farm Pride i.e., Farm Pride and Dicker Data go up and down completely randomly.
Pair Corralation between Farm Pride and Dicker Data
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 3.12 times more return on investment than Dicker Data. However, Farm Pride is 3.12 times more volatile than Dicker Data. It trades about -0.02 of its potential returns per unit of risk. Dicker Data is currently generating about -0.15 per unit of risk. If you would invest 13.00 in Farm Pride Foods on September 13, 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 | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Dicker Data
Performance |
| Timeline |
| Farm Pride Foods |
| Dicker Data |
Farm Pride and Dicker Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Dicker Data
The main advantage of trading using opposite Farm Pride and Dicker Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Dicker Data 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 Dicker Data will offset losses from the drop in Dicker Data's long position.| Farm Pride vs. Aneka Tambang Tbk | Farm Pride vs. Macquarie Group | Farm Pride vs. Macquarie Group Ltd | Farm Pride vs. Challenger |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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