Correlation Between KINGBOARD CHEMICAL and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Dairy Farm 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 KINGBOARD CHEMICAL and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Dairy Farm International, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Dairy Farm 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 KINGBOARD CHEMICAL with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Dairy Farm.
Diversification Opportunities for KINGBOARD CHEMICAL and Dairy Farm
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KINGBOARD and Dairy is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Dairy Farm go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Dairy Farm
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 0.7 times more return on investment than Dairy Farm. However, KINGBOARD CHEMICAL is 1.43 times less risky than Dairy Farm. It trades about 0.22 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.05 per unit of risk. If you would invest 226.00 in KINGBOARD CHEMICAL on November 5, 2024 and sell it today you would earn a total of 20.00 from holding KINGBOARD CHEMICAL or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Dairy Farm International
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Dairy Farm International |
KINGBOARD CHEMICAL and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Dairy Farm
The main advantage of trading using opposite KINGBOARD CHEMICAL and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| KINGBOARD CHEMICAL vs. Summit Hotel Properties | KINGBOARD CHEMICAL vs. SOCKET MOBILE NEW | KINGBOARD CHEMICAL vs. Pebblebrook Hotel Trust | KINGBOARD CHEMICAL vs. URBAN OUTFITTERS |
| Dairy Farm vs. NEWELL RUBBERMAID | Dairy Farm vs. GRUPO CARSO A1 | Dairy Farm vs. Cars Inc | Dairy Farm vs. AIR PRODCHEMICALS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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