Correlation Between LIVESTOCK FEED and ABC BANKING
Can any of the company-specific risk be diversified away by investing in both LIVESTOCK FEED and ABC BANKING 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 LIVESTOCK FEED and ABC BANKING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIVESTOCK FEED LTD and ABC BANKING PORATION, you can compare the effects of market volatilities on LIVESTOCK FEED and ABC BANKING 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 LIVESTOCK FEED with a short position of ABC BANKING. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIVESTOCK FEED and ABC BANKING.
Diversification Opportunities for LIVESTOCK FEED and ABC BANKING
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LIVESTOCK and ABC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding LIVESTOCK FEED LTD and ABC BANKING PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC BANKING PORATION and LIVESTOCK FEED 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 LIVESTOCK FEED LTD are associated (or correlated) with ABC BANKING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC BANKING PORATION has no effect on the direction of LIVESTOCK FEED i.e., LIVESTOCK FEED and ABC BANKING go up and down completely randomly.
Pair Corralation between LIVESTOCK FEED and ABC BANKING
Assuming the 90 days trading horizon LIVESTOCK FEED LTD is expected to generate 2.74 times more return on investment than ABC BANKING. However, LIVESTOCK FEED is 2.74 times more volatile than ABC BANKING PORATION. It trades about -0.11 of its potential returns per unit of risk. ABC BANKING PORATION is currently generating about -0.39 per unit of risk. If you would invest 1,925 in LIVESTOCK FEED LTD on September 2, 2024 and sell it today you would lose (75.00) from holding LIVESTOCK FEED LTD or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIVESTOCK FEED LTD vs. ABC BANKING PORATION
Performance |
| Timeline |
| LIVESTOCK FEED LTD |
| ABC BANKING PORATION |
LIVESTOCK FEED and ABC BANKING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIVESTOCK FEED and ABC BANKING
The main advantage of trading using opposite LIVESTOCK FEED and ABC BANKING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIVESTOCK FEED position performs unexpectedly, ABC BANKING 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 ABC BANKING will offset losses from the drop in ABC BANKING's long position.| LIVESTOCK FEED vs. ABC BANKING PORATION | LIVESTOCK FEED vs. FINCORP INVESTMENT LTD | LIVESTOCK FEED vs. QUALITY BEVERAGES LTD | LIVESTOCK FEED vs. BEAU VALLON HOSPITAL |
| ABC BANKING vs. FINCORP INVESTMENT LTD | ABC BANKING vs. MCB GROUP LTD | ABC BANKING vs. CAUDAN DEVELOPMENT LTD | ABC BANKING vs. LUX ISLAND RESORTS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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