Correlation Between Retail Food and Bio Gene
Can any of the company-specific risk be diversified away by investing in both Retail Food and Bio Gene 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 Bio Gene 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 Bio Gene Technology, you can compare the effects of market volatilities on Retail Food and Bio Gene 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 Bio Gene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Bio Gene.
Diversification Opportunities for Retail Food and Bio Gene
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and Bio is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Bio Gene Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Gene Technology 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 Bio Gene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Gene Technology has no effect on the direction of Retail Food i.e., Retail Food and Bio Gene go up and down completely randomly.
Pair Corralation between Retail Food and Bio Gene
Assuming the 90 days trading horizon Retail Food Group is expected to generate 0.65 times more return on investment than Bio Gene. However, Retail Food Group is 1.53 times less risky than Bio Gene. It trades about 0.02 of its potential returns per unit of risk. Bio Gene Technology is currently generating about -0.01 per unit of risk. If you would invest 6.80 in Retail Food Group on September 2, 2024 and sell it today you would earn a total of 0.40 from holding Retail Food Group or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Bio Gene Technology
Performance |
| Timeline |
| Retail Food Group |
| Bio Gene Technology |
Retail Food and Bio Gene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Bio Gene
The main advantage of trading using opposite Retail Food and Bio Gene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Bio Gene 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 Bio Gene will offset losses from the drop in Bio Gene's long position.| Retail Food vs. iShares Global Healthcare | Retail Food vs. Australian Dairy Farms | Retail Food vs. Adriatic Metals Plc | Retail Food vs. Australian Agricultural |
| Bio Gene vs. Northern Star Resources | Bio Gene vs. Evolution Mining | Bio Gene vs. Bluescope Steel | Bio Gene 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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