Correlation Between Belite Bio and Dairy Farm

Can any of the company-specific risk be diversified away by investing in both Belite Bio and Dairy Farm 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 Belite Bio and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Belite Bio ADR and Dairy Farm International, you can compare the effects of market volatilities on Belite Bio and Dairy Farm 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 Belite Bio with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belite Bio and Dairy Farm.

Diversification Opportunities for Belite Bio and Dairy Farm

0.0

Correlation Coefficient

Belite Bio  Dairy Farm

Pay attention - limited upside

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

Pair Corralation between Belite Bio and Dairy Farm

If you would invest  215.00  in Dairy Farm International on November 19, 2024 and sell it today you would earn a total of  0.00  from holding Dairy Farm International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Belite Bio ADR  vs.  Dairy Farm International

Belite Bio ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belite Bio ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dairy Farm International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Dairy Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Belite Bio and Dairy Farm

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

The idea behind Belite Bio ADR and Dairy Farm International 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.