Correlation Between DAIRY FARM and EVN AG

Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and EVN AG 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 EVN AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAIRY FARM INTL and EVN AG, you can compare the effects of market volatilities on DAIRY FARM and EVN AG 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 EVN AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and EVN AG.

Diversification Opportunities for DAIRY FARM and EVN AG

-0.12

Correlation Coefficient

DAIRY FARM  EVN AG

Good diversification

The 3 months correlation between DAIRY and EVN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and EVN AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN AG 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 INTL are associated (or correlated) with EVN AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN AG has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and EVN AG go up and down completely randomly.

Pair Corralation between DAIRY FARM and EVN AG

Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the EVN AG. But the stock apears to be less risky and, when comparing its historical volatility, DAIRY FARM INTL is 1.55 times less risky than EVN AG. The stock trades about -0.23 of its potential returns per unit of risk. The EVN AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,140  in EVN AG on October 25, 2024 and sell it today you would earn a total of  115.00  from holding EVN AG or generate 5.37% return on investment over 90 days.

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

DAIRY FARM INTL  vs.  EVN AG

DAIRY FARM INTL

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

EVN AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DAIRY FARM and EVN AG

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

The idea behind DAIRY FARM INTL and EVN AG 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.