Correlation Between Dairy Farm and GWILLI FOOD

Can any of the company-specific risk be diversified away by investing in both Dairy Farm and GWILLI FOOD 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 GWILLI FOOD 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 GWILLI FOOD, you can compare the effects of market volatilities on Dairy Farm and GWILLI FOOD 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 GWILLI FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and GWILLI FOOD.

Diversification Opportunities for Dairy Farm and GWILLI FOOD

0.37

Correlation Coefficient

Dairy Farm  GWILLI FOOD

Weak diversification

The 3 months correlation between Dairy and GWILLI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD 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 GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Dairy Farm i.e., Dairy Farm and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Dairy Farm and GWILLI FOOD

Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the GWILLI FOOD. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.15 times less risky than GWILLI FOOD. The stock trades about -0.01 of its potential returns per unit of risk. The GWILLI FOOD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,035  in GWILLI FOOD on October 23, 2024 and sell it today you would earn a total of  485.00  from holding GWILLI FOOD or generate 46.86% return on investment over 90 days.

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

Dairy Farm International  vs.  GWILLI FOOD

Dairy Farm International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dairy Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GWILLI FOOD

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dairy Farm and GWILLI FOOD

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

The idea behind Dairy Farm International and GWILLI FOOD 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.