Correlation Between TasFoods and Ecofibre
Can any of the company-specific risk be diversified away by investing in both TasFoods and Ecofibre 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 TasFoods and Ecofibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TasFoods and Ecofibre, you can compare the effects of market volatilities on TasFoods and Ecofibre 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 TasFoods with a short position of Ecofibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of TasFoods and Ecofibre.
Diversification Opportunities for TasFoods and Ecofibre
Modest diversification
The 3 months correlation between TasFoods and Ecofibre is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding TasFoods and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and TasFoods 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 TasFoods are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of TasFoods i.e., TasFoods and Ecofibre go up and down completely randomly.
Pair Corralation between TasFoods and Ecofibre
Assuming the 90 days trading horizon TasFoods is expected to generate 0.55 times more return on investment than Ecofibre. However, TasFoods is 1.81 times less risky than Ecofibre. It trades about -0.31 of its potential returns per unit of risk. Ecofibre is currently generating about -0.43 per unit of risk. If you would invest 1.30 in TasFoods on September 5, 2024 and sell it today you would lose (0.20) from holding TasFoods or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TasFoods vs. Ecofibre
Performance |
| Timeline |
| TasFoods |
| Ecofibre |
TasFoods and Ecofibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TasFoods and Ecofibre
The main advantage of trading using opposite TasFoods and Ecofibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TasFoods position performs unexpectedly, Ecofibre 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 Ecofibre will offset losses from the drop in Ecofibre's long position.| TasFoods vs. Audio Pixels Holdings | TasFoods vs. Norwest Minerals | TasFoods vs. Lindian Resources | TasFoods vs. Resource Base |
| Ecofibre vs. Kneomedia | Ecofibre vs. Centuria Industrial Reit | Ecofibre vs. Beston Global Food | Ecofibre vs. National Storage REIT |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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