Correlation Between Farm Pride and Metro Mining
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Metro 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 Metro 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 Metro Mining, you can compare the effects of market volatilities on Farm Pride and Metro 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 Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Metro Mining.
Diversification Opportunities for Farm Pride and Metro Mining
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farm and Metro is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro 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 Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Farm Pride i.e., Farm Pride and Metro Mining go up and down completely randomly.
Pair Corralation between Farm Pride and Metro Mining
Assuming the 90 days trading horizon Farm Pride is expected to generate 1.45 times less return on investment than Metro Mining. In addition to that, Farm Pride is 1.53 times more volatile than Metro Mining. It trades about 0.07 of its total potential returns per unit of risk. Metro Mining is currently generating about 0.16 per unit of volatility. If you would invest 3.70 in Metro Mining on November 2, 2024 and sell it today you would earn a total of 2.40 from holding Metro Mining or generate 64.86% 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. Metro Mining
Performance |
| Timeline |
| Farm Pride Foods |
| Metro Mining |
Farm Pride and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Metro Mining
The main advantage of trading using opposite Farm Pride and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Metro 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| Farm Pride vs. Sequoia Financial Group | Farm Pride vs. Pure Foods Tasmania | Farm Pride vs. TPG Telecom | Farm Pride vs. Liberty Financial Group |
| Metro Mining vs. Steamships Trading | Metro Mining vs. Beston Global Food | Metro Mining vs. Sandon Capital Investments | Metro Mining vs. Djerriwarrh Investments |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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