Correlation Between AUSNUTRIA DAIRY and SENECA FOODS-A

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

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

Diversification Opportunities for AUSNUTRIA DAIRY and SENECA FOODS-A

-0.73

Correlation Coefficient

AUSNUTRIA DAIRY  SENECA FOODS-A

Pay attention - limited upside

The 3 months correlation between AUSNUTRIA and SENECA is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding AUSNUTRIA DAIRY and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A and AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY are associated (or correlated) with SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of AUSNUTRIA DAIRY i.e., AUSNUTRIA DAIRY and SENECA FOODS-A go up and down completely randomly.

Pair Corralation between AUSNUTRIA DAIRY and SENECA FOODS-A

Assuming the 90 days trading horizon AUSNUTRIA DAIRY is expected to generate 1.46 times more return on investment than SENECA FOODS-A. However, AUSNUTRIA DAIRY is 1.46 times more volatile than SENECA FOODS A. It trades about 0.08 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.09 per unit of risk. If you would invest  22.00  in AUSNUTRIA DAIRY on October 13, 2024 and sell it today you would earn a total of  1.00  from holding AUSNUTRIA DAIRY or generate 4.55% return on investment over 90 days.

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

AUSNUTRIA DAIRY  vs.  SENECA FOODS A

AUSNUTRIA DAIRY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUSNUTRIA DAIRY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SENECA FOODS A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUSNUTRIA DAIRY and SENECA FOODS-A

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

The idea behind AUSNUTRIA DAIRY and SENECA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.