Correlation Between Dairy Farm and REYNA SILVER

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

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

Diversification Opportunities for Dairy Farm and REYNA SILVER

0.04

Correlation Coefficient

Dairy Farm  REYNA SILVER

Significant diversification

The 3 months correlation between Dairy and REYNA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and REYNA SILVER P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REYNA SILVER P and Dairy Farm 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 Dairy Farm International are associated (or correlated) with REYNA SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REYNA SILVER P has no effect on the direction of Dairy Farm i.e., Dairy Farm and REYNA SILVER go up and down completely randomly.

Pair Corralation between Dairy Farm and REYNA SILVER

Assuming the 90 days trading horizon Dairy Farm is expected to generate 2.77 times less return on investment than REYNA SILVER. But when comparing it to its historical volatility, Dairy Farm International is 5.11 times less risky than REYNA SILVER. It trades about 0.07 of its potential returns per unit of risk. REYNA SILVER P is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.88  in REYNA SILVER P on October 8, 2024 and sell it today you would lose (0.72) from holding REYNA SILVER P or give up 10.47% of portfolio value over 90 days.

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

Dairy Farm International  vs.  REYNA SILVER P

Dairy Farm International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dairy Farm may actually be approaching a critical reversion point that can send shares even higher in February 2025.

REYNA SILVER P

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REYNA SILVER P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REYNA SILVER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dairy Farm and REYNA SILVER

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

The idea behind Dairy Farm International and REYNA SILVER P 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.