Correlation Between Mount Gibson and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Mount Gibson 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 Mount Gibson and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Farm Pride Foods, you can compare the effects of market volatilities on Mount Gibson 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 Mount Gibson with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Farm Pride.
Diversification Opportunities for Mount Gibson and Farm Pride
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mount and Farm is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron 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 Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Farm Pride go up and down completely randomly.
Pair Corralation between Mount Gibson and Farm Pride
Assuming the 90 days trading horizon Mount Gibson Iron is expected to under-perform the Farm Pride. But the stock apears to be less risky and, when comparing its historical volatility, Mount Gibson Iron is 3.53 times less risky than Farm Pride. The stock trades about -0.18 of its potential returns per unit of risk. The Farm Pride Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Farm Pride Foods on October 16, 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 | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Mount Gibson Iron vs. Farm Pride Foods
Performance |
| Timeline |
| Mount Gibson Iron |
| Farm Pride Foods |
Mount Gibson and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Farm Pride
The main advantage of trading using opposite Mount Gibson and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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.| Mount Gibson vs. Black Rock Mining | Mount Gibson vs. Truscott Mining Corp | Mount Gibson vs. Australian Strategic Materials | Mount Gibson vs. MetalsGrove Mining |
| Farm Pride vs. Neurotech International | Farm Pride vs. Platinum Asia Investments | Farm Pride vs. A1 Investments Resources | Farm Pride vs. Djerriwarrh Investments |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |