Correlation Between Retail Food and Andean Silver
Can any of the company-specific risk be diversified away by investing in both Retail Food and Andean Silver 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 Retail Food and Andean Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Andean Silver Limited, you can compare the effects of market volatilities on Retail Food and Andean Silver 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 Retail Food with a short position of Andean Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Andean Silver.
Diversification Opportunities for Retail Food and Andean Silver
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Andean is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited and Retail Food 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 Retail Food Group are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of Retail Food i.e., Retail Food and Andean Silver go up and down completely randomly.
Pair Corralation between Retail Food and Andean Silver
Assuming the 90 days trading horizon Retail Food is expected to generate 54.33 times less return on investment than Andean Silver. But when comparing it to its historical volatility, Retail Food Group is 2.36 times less risky than Andean Silver. It trades about 0.01 of its potential returns per unit of risk. Andean Silver Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Andean Silver Limited on August 27, 2024 and sell it today you would earn a total of 72.00 from holding Andean Silver Limited or generate 257.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.88% |
| Values | Daily Returns |
Retail Food Group vs. Andean Silver Limited
Performance |
| Timeline |
| Retail Food Group |
| Andean Silver Limited |
Retail Food and Andean Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Andean Silver
The main advantage of trading using opposite Retail Food and Andean Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Andean Silver 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 Andean Silver will offset losses from the drop in Andean Silver's long position.| Retail Food vs. Summit Resources Limited | Retail Food vs. Ecofibre | Retail Food vs. iShares Global Healthcare | Retail Food vs. Adriatic Metals Plc |
| Andean Silver vs. Northern Star Resources | Andean Silver vs. Evolution Mining | Andean Silver vs. Bluescope Steel | Andean Silver vs. Sandfire Resources NL |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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