Correlation Between Penta Ocean and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Penta Ocean 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 Penta Ocean and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penta Ocean Construction Co and Dairy Farm International, you can compare the effects of market volatilities on Penta Ocean 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 Penta Ocean with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and Dairy Farm.
Diversification Opportunities for Penta Ocean and Dairy Farm
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Penta and Dairy is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and Penta Ocean 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 Penta Ocean Construction Co 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 International has no effect on the direction of Penta Ocean i.e., Penta Ocean and Dairy Farm go up and down completely randomly.
Pair Corralation between Penta Ocean and Dairy Farm
Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.52 times more return on investment than Dairy Farm. However, Penta Ocean Construction Co is 1.92 times less risky than Dairy Farm. It trades about 0.03 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.19 per unit of risk. If you would invest 390.00 in Penta Ocean Construction Co on October 26, 2024 and sell it today you would earn a total of 2.00 from holding Penta Ocean Construction Co or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. Dairy Farm International
Performance |
| Timeline |
| Penta Ocean Construc |
| Dairy Farm International |
Penta Ocean and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta Ocean and Dairy Farm
The main advantage of trading using opposite Penta Ocean and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean 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.| Penta Ocean vs. DXC Technology Co | Penta Ocean vs. Magnachip Semiconductor | Penta Ocean vs. Kingdee International Software | Penta Ocean vs. NXP Semiconductors NV |
| Dairy Farm vs. Silicon Motion Technology | Dairy Farm vs. IMPERIAL TOBACCO | Dairy Farm vs. KINGBOARD CHEMICAL | Dairy Farm vs. Quaker Chemical |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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