Correlation Between Columbia Sportswear and DAIRY FARM

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

Diversification Opportunities for Columbia Sportswear and DAIRY FARM

ColumbiaDAIRYDiversified AwayColumbiaDAIRYDiversified Away100%
0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Columbia and DAIRY is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and Columbia Sportswear 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 Columbia Sportswear 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 INTL has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and DAIRY FARM go up and down completely randomly.

Pair Corralation between Columbia Sportswear and DAIRY FARM

Assuming the 90 days horizon Columbia Sportswear is expected to generate 1.15 times more return on investment than DAIRY FARM. However, Columbia Sportswear is 1.15 times more volatile than DAIRY FARM INTL. It trades about 0.21 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.01 per unit of risk. If you would invest  6,923  in Columbia Sportswear on October 28, 2024 and sell it today you would earn a total of  1,577  from holding Columbia Sportswear or generate 22.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Columbia Sportswear  vs.  DAIRY FARM INTL

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-50510
JavaScript chart by amCharts 3.21.15CUW DFA1
       Timeline  
Columbia Sportswear 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Columbia Sportswear reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan707274767880828486
DAIRY FARM INTL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DAIRY FARM INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DAIRY FARM is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2.12.152.22.252.32.352.4

Columbia Sportswear and DAIRY FARM Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.5-4.12-2.74-1.360.01.432.884.345.79 0.050.100.15
JavaScript chart by amCharts 3.21.15CUW DFA1
       Returns  

Pair Trading with Columbia Sportswear and DAIRY FARM

The main advantage of trading using opposite Columbia Sportswear and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear 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 Columbia Sportswear and DAIRY FARM INTL 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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