Correlation Between Beston Global and Australian Dairy

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Can any of the company-specific risk be diversified away by investing in both Beston Global and Australian Dairy 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 Beston Global and Australian Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beston Global Food and Australian Dairy Farms, you can compare the effects of market volatilities on Beston Global and Australian Dairy 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 Beston Global with a short position of Australian Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beston Global and Australian Dairy.

Diversification Opportunities for Beston Global and Australian Dairy

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Beston and Australian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Beston Global Food and Australian Dairy Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Dairy Farms and Beston Global 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 Beston Global Food are associated (or correlated) with Australian Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Dairy Farms has no effect on the direction of Beston Global i.e., Beston Global and Australian Dairy go up and down completely randomly.

Pair Corralation between Beston Global and Australian Dairy

Assuming the 90 days trading horizon Beston Global is expected to generate 2.5 times less return on investment than Australian Dairy. In addition to that, Beston Global is 1.69 times more volatile than Australian Dairy Farms. It trades about 0.01 of its total potential returns per unit of risk. Australian Dairy Farms is currently generating about 0.05 per unit of volatility. If you would invest  4.00  in Australian Dairy Farms on October 10, 2024 and sell it today you would earn a total of  2.30  from holding Australian Dairy Farms or generate 57.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Beston Global Food  vs.  Australian Dairy Farms

 Performance 
       Timeline  
Beston Global Food 

Risk-Adjusted Performance

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Over the last 90 days Beston Global Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Beston Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Australian Dairy Farms 

Risk-Adjusted Performance

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Weak
 
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Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Australian Dairy Farms are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Australian Dairy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Beston Global and Australian Dairy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beston Global and Australian Dairy

The main advantage of trading using opposite Beston Global and Australian Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beston Global position performs unexpectedly, Australian Dairy 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 Australian Dairy will offset losses from the drop in Australian Dairy's long position.
The idea behind Beston Global Food and Australian Dairy Farms 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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