Correlation Between Farm Pride and Sky Metals
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Sky Metals 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 Sky Metals 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 Sky Metals, you can compare the effects of market volatilities on Farm Pride and Sky Metals 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 Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Sky Metals.
Diversification Opportunities for Farm Pride and Sky Metals
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farm and Sky is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Metals 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 Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Farm Pride i.e., Farm Pride and Sky Metals go up and down completely randomly.
Pair Corralation between Farm Pride and Sky Metals
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 3.74 times more return on investment than Sky Metals. However, Farm Pride is 3.74 times more volatile than Sky Metals. It trades about 0.15 of its potential returns per unit of risk. Sky Metals is currently generating about 0.01 per unit of risk. If you would invest 12.00 in Farm Pride Foods on October 17, 2024 and sell it today you would earn a total of 2.00 from holding Farm Pride Foods or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Sky Metals
Performance |
| Timeline |
| Farm Pride Foods |
| Sky Metals |
Farm Pride and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Sky Metals
The main advantage of trading using opposite Farm Pride and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Sky Metals 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 Sky Metals will offset losses from the drop in Sky Metals' long position.| Farm Pride vs. Embark Education Group | Farm Pride vs. Pure Foods Tasmania | Farm Pride vs. Kip McGrath Education | Farm Pride vs. Air New Zealand |
| Sky Metals vs. Retail Food Group | Sky Metals vs. Skycity Entertainment Group | Sky Metals vs. ARN Media Limited | Sky Metals vs. Step One Clothing |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |