Correlation Between LiqTech International and Dr Foods
Can any of the company-specific risk be diversified away by investing in both LiqTech International and Dr Foods 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 LiqTech International and Dr Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LiqTech International and Dr Foods, you can compare the effects of market volatilities on LiqTech International and Dr Foods 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 LiqTech International with a short position of Dr Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiqTech International and Dr Foods.
Diversification Opportunities for LiqTech International and Dr Foods
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between LiqTech and DRFS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Dr Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Foods and LiqTech International 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 LiqTech International are associated (or correlated) with Dr Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Foods has no effect on the direction of LiqTech International i.e., LiqTech International and Dr Foods go up and down completely randomly.
Pair Corralation between LiqTech International and Dr Foods
Given the investment horizon of 90 days LiqTech International is expected to generate 17.26 times less return on investment than Dr Foods. But when comparing it to its historical volatility, LiqTech International is 3.79 times less risky than Dr Foods. It trades about 0.01 of its potential returns per unit of risk. Dr Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.40 in Dr Foods on August 30, 2024 and sell it today you would lose (1.40) from holding Dr Foods or give up 25.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LiqTech International vs. Dr Foods
Performance |
| Timeline |
| LiqTech International |
| Dr Foods |
LiqTech International and Dr Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiqTech International and Dr Foods
The main advantage of trading using opposite LiqTech International and Dr Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiqTech International position performs unexpectedly, Dr Foods 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 Dr Foods will offset losses from the drop in Dr Foods' long position.| LiqTech International vs. China Natural Resources | LiqTech International vs. Seychelle Environmtl | LiqTech International vs. Vow ASA | LiqTech International vs. Eestech |
| Dr Foods vs. Seychelle Environmtl | Dr Foods vs. Vow ASA | Dr Foods vs. Eestech | Dr Foods vs. One World Universe |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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