Correlation Between Johns Lyng and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Johns Lyng and Farm Pride 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 Johns Lyng and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johns Lyng Group and Farm Pride Foods, you can compare the effects of market volatilities on Johns Lyng and Farm Pride 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 Johns Lyng with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johns Lyng and Farm Pride.
Diversification Opportunities for Johns Lyng and Farm Pride
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Johns and Farm is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Johns Lyng Group and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods and Johns Lyng 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 Johns Lyng Group are associated (or correlated) with Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Johns Lyng i.e., Johns Lyng and Farm Pride go up and down completely randomly.
Pair Corralation between Johns Lyng and Farm Pride
Assuming the 90 days trading horizon Johns Lyng Group is expected to generate 0.48 times more return on investment than Farm Pride. However, Johns Lyng Group is 2.08 times less risky than Farm Pride. It trades about -0.01 of its potential returns per unit of risk. Farm Pride Foods is currently generating about -0.02 per unit of risk. If you would invest 385.00 in Johns Lyng Group on September 13, 2024 and sell it today you would lose (8.00) from holding Johns Lyng Group or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johns Lyng Group vs. Farm Pride Foods
Performance |
| Timeline |
| Johns Lyng Group |
| Farm Pride Foods |
Johns Lyng and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johns Lyng and Farm Pride
The main advantage of trading using opposite Johns Lyng and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johns Lyng position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.| Johns Lyng vs. Patriot Battery Metals | Johns Lyng vs. Group 6 Metals | Johns Lyng vs. Ainsworth Game Technology | Johns Lyng vs. Capitol Health |
| Farm Pride vs. Aneka Tambang Tbk | Farm Pride vs. Macquarie Group | Farm Pride vs. Macquarie Group Ltd | Farm Pride vs. Challenger |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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