Correlation Between Pure Foods and London City
Can any of the company-specific risk be diversified away by investing in both Pure Foods and London City 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 London City 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 London City Equities, you can compare the effects of market volatilities on Pure Foods and London City 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 London City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Foods and London City.
Diversification Opportunities for Pure Foods and London City
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pure and London is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pure Foods Tasmania and London City Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London City Equities 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 London City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London City Equities has no effect on the direction of Pure Foods i.e., Pure Foods and London City go up and down completely randomly.
Pair Corralation between Pure Foods and London City
Assuming the 90 days trading horizon Pure Foods Tasmania is expected to under-perform the London City. In addition to that, Pure Foods is 3.97 times more volatile than London City Equities. It trades about -0.02 of its total potential returns per unit of risk. London City Equities is currently generating about 0.19 per unit of volatility. If you would invest 59.00 in London City Equities on October 18, 2024 and sell it today you would earn a total of 28.00 from holding London City Equities or generate 47.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Foods Tasmania vs. London City Equities
Performance |
| Timeline |
| Pure Foods Tasmania |
| London City Equities |
Pure Foods and London City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Foods and London City
The main advantage of trading using opposite Pure Foods and London City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Foods position performs unexpectedly, London City 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 London City will offset losses from the drop in London City's long position.| Pure Foods vs. Ainsworth Game Technology | Pure Foods vs. Vulcan Steel | Pure Foods vs. Neurotech International | Pure Foods vs. Ironbark Capital |
| London City vs. Duketon Mining | London City vs. Chalice Mining Limited | London City vs. Super Retail Group | London City 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |