Correlation Between COFCO Joycome and TYSON FOODS

Can any of the company-specific risk be diversified away by investing in both COFCO Joycome and TYSON FOODS 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 COFCO Joycome and TYSON FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COFCO Joycome Foods and TYSON FOODS A , you can compare the effects of market volatilities on COFCO Joycome and TYSON FOODS 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 COFCO Joycome with a short position of TYSON FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFCO Joycome and TYSON FOODS.

Diversification Opportunities for COFCO Joycome and TYSON FOODS

0.47

Correlation Coefficient

COFCO Joycome  TYSON FOODS

Very weak diversification

The 3 months correlation between COFCO and TYSON is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding COFCO Joycome Foods and TYSON FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYSON FOODS A and COFCO Joycome 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 COFCO Joycome Foods are associated (or correlated) with TYSON FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYSON FOODS A has no effect on the direction of COFCO Joycome i.e., COFCO Joycome and TYSON FOODS go up and down completely randomly.

Pair Corralation between COFCO Joycome and TYSON FOODS

Assuming the 90 days horizon COFCO Joycome is expected to generate 9.8 times less return on investment than TYSON FOODS. In addition to that, COFCO Joycome is 1.84 times more volatile than TYSON FOODS A . It trades about 0.01 of its total potential returns per unit of risk. TYSON FOODS A is currently generating about 0.23 per unit of volatility. If you would invest  5,400  in TYSON FOODS A on December 2, 2024 and sell it today you would earn a total of  390.00  from holding TYSON FOODS A or generate 7.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

COFCO Joycome Foods  vs.  TYSON FOODS A

COFCO Joycome Foods

Risk-Adjusted Performance

Insignificant

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COFCO Joycome is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TYSON FOODS A

Risk-Adjusted Performance

Very Weak

Over the last 90 days TYSON FOODS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TYSON FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with COFCO Joycome and TYSON FOODS

The main advantage of trading using opposite COFCO Joycome and TYSON FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFCO Joycome position performs unexpectedly, TYSON FOODS 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 TYSON FOODS will offset losses from the drop in TYSON FOODS's long position.

The idea behind COFCO Joycome Foods and TYSON FOODS A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.