Correlation Between Clime Investment and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Clime Investment and Farm Pride 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 Clime Investment and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clime Investment Management and Farm Pride Foods, you can compare the effects of market volatilities on Clime Investment and Farm Pride 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 Clime Investment with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Farm Pride.
Diversification Opportunities for Clime Investment and Farm Pride
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clime and Farm is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods and Clime Investment 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 Clime Investment Management are associated (or correlated) with Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Clime Investment i.e., Clime Investment and Farm Pride go up and down completely randomly.
Pair Corralation between Clime Investment and Farm Pride
Assuming the 90 days trading horizon Clime Investment is expected to generate 3.48 times less return on investment than Farm Pride. But when comparing it to its historical volatility, Clime Investment Management is 1.58 times less risky than Farm Pride. It trades about 0.12 of its potential returns per unit of risk. Farm Pride Foods is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Farm Pride Foods on December 2, 2024 and sell it today you would earn a total of 3.00 from holding Farm Pride Foods or generate 20.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Clime Investment Management vs. Farm Pride Foods
Performance |
Timeline |
Clime Investment Man |
Farm Pride Foods |
Clime Investment and Farm Pride Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clime Investment and Farm Pride
The main advantage of trading using opposite Clime Investment and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.Clime Investment vs. Aeon Metals | Clime Investment vs. Maggie Beer Holdings | Clime Investment vs. Oneview Healthcare PLC | Clime Investment vs. Centuria Industrial Reit |
Farm Pride vs. Centuria Industrial Reit | Farm Pride vs. Aeon Metals | Farm Pride vs. Aeris Environmental | Farm Pride vs. Perseus Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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