Correlation Between Pure Foods and Autosports
Can any of the company-specific risk be diversified away by investing in both Pure Foods and Autosports 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 Pure Foods and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Foods Tasmania and Autosports Group, you can compare the effects of market volatilities on Pure Foods and Autosports 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 Pure Foods with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Foods and Autosports.
Diversification Opportunities for Pure Foods and Autosports
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pure and Autosports is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pure Foods Tasmania and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Pure Foods 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 Pure Foods Tasmania are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Pure Foods i.e., Pure Foods and Autosports go up and down completely randomly.
Pair Corralation between Pure Foods and Autosports
Assuming the 90 days trading horizon Pure Foods Tasmania is expected to under-perform the Autosports. In addition to that, Pure Foods is 3.49 times more volatile than Autosports Group. It trades about -0.03 of its total potential returns per unit of risk. Autosports Group is currently generating about 0.01 per unit of volatility. If you would invest 176.00 in Autosports Group on October 12, 2024 and sell it today you would lose (1.00) from holding Autosports Group or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Pure Foods Tasmania vs. Autosports Group
Performance |
| Timeline |
| Pure Foods Tasmania |
| Autosports Group |
Pure Foods and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Foods and Autosports
The main advantage of trading using opposite Pure Foods and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Foods position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Pure Foods vs. Ainsworth Game Technology | Pure Foods vs. Centrex Metals | Pure Foods vs. Sky Metals | Pure Foods vs. Torque Metals |
| Autosports vs. Ras Technology Holdings | Autosports vs. Advanced Braking Technology | Autosports vs. Dug Technology | Autosports vs. Pure Foods Tasmania |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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