Correlation Between Farm Pride and EROAD
Can any of the company-specific risk be diversified away by investing in both Farm Pride and EROAD 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 EROAD 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 EROAD, you can compare the effects of market volatilities on Farm Pride and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and EROAD.
Diversification Opportunities for Farm Pride and EROAD
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farm and EROAD is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Farm Pride i.e., Farm Pride and EROAD go up and down completely randomly.
Pair Corralation between Farm Pride and EROAD
Assuming the 90 days trading horizon Farm Pride Foods is expected to under-perform the EROAD. In addition to that, Farm Pride is 2.44 times more volatile than EROAD. It trades about -0.05 of its total potential returns per unit of risk. EROAD is currently generating about 0.09 per unit of volatility. If you would invest 82.00 in EROAD on September 15, 2024 and sell it today you would earn a total of 3.00 from holding EROAD or generate 3.66% 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. EROAD
Performance |
| Timeline |
| Farm Pride Foods |
| EROAD |
Farm Pride and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and EROAD
The main advantage of trading using opposite Farm Pride and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Farm Pride vs. ARN Media Limited | Farm Pride vs. Premier Investments | Farm Pride vs. BKI Investment | Farm Pride vs. Garda Diversified Ppty |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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