Correlation Between Retail Food and Otto Energy
Can any of the company-specific risk be diversified away by investing in both Retail Food and Otto Energy 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 Otto Energy 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 Otto Energy, you can compare the effects of market volatilities on Retail Food and Otto Energy 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 Otto Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Otto Energy.
Diversification Opportunities for Retail Food and Otto Energy
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Otto is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Otto Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otto Energy 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 Otto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otto Energy has no effect on the direction of Retail Food i.e., Retail Food and Otto Energy go up and down completely randomly.
Pair Corralation between Retail Food and Otto Energy
Assuming the 90 days trading horizon Retail Food Group is expected to generate 0.45 times more return on investment than Otto Energy. However, Retail Food Group is 2.23 times less risky than Otto Energy. It trades about 0.05 of its potential returns per unit of risk. Otto Energy is currently generating about 0.01 per unit of risk. If you would invest 5.60 in Retail Food Group on September 4, 2024 and sell it today you would earn a total of 1.60 from holding Retail Food Group or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Retail Food Group vs. Otto Energy
Performance |
| Timeline |
| Retail Food Group |
| Otto Energy |
Retail Food and Otto Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Otto Energy
The main advantage of trading using opposite Retail Food and Otto Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Otto Energy 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 Otto Energy will offset losses from the drop in Otto Energy's long position.| Retail Food vs. Aneka Tambang Tbk | Retail Food vs. BHP Group Limited | Retail Food vs. Commonwealth Bank of | Retail Food vs. Commonwealth Bank of |
| Otto Energy vs. EROAD | Otto Energy vs. Gold Road Resources | Otto Energy vs. ACDC Metals | Otto Energy vs. Stelar Metals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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