Correlation Between FLOW TRADERS and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and DAIRY FARM INTL, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and DAIRY FARM.
Diversification Opportunities for FLOW TRADERS and DAIRY FARM
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and DAIRY is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and FLOW TRADERS 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 FLOW TRADERS LTD 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 INTL has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and DAIRY FARM go up and down completely randomly.
Pair Corralation between FLOW TRADERS and DAIRY FARM
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.84 times more return on investment than DAIRY FARM. However, FLOW TRADERS LTD is 1.19 times less risky than DAIRY FARM. It trades about 0.15 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.15 per unit of risk. If you would invest 2,084 in FLOW TRADERS LTD on September 28, 2024 and sell it today you would earn a total of 80.00 from holding FLOW TRADERS LTD or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. DAIRY FARM INTL
Performance |
| Timeline |
| FLOW TRADERS LTD |
| DAIRY FARM INTL |
FLOW TRADERS and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and DAIRY FARM
The main advantage of trading using opposite FLOW TRADERS and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. SP Global | FLOW TRADERS vs. Moodys |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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