Correlation Between DAIRY FARM and Amphenol

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

Diversification Opportunities for DAIRY FARM and Amphenol

0.72

Correlation Coefficient

DAIRY FARM  Amphenol

Poor diversification

The 3 months correlation between DAIRY and Amphenol is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Amphenol go up and down completely randomly.

Pair Corralation between DAIRY FARM and Amphenol

Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 0.86 times more return on investment than Amphenol. However, DAIRY FARM INTL is 1.16 times less risky than Amphenol. It trades about -0.03 of its potential returns per unit of risk. Amphenol is currently generating about -0.05 per unit of risk. If you would invest  217.00  in DAIRY FARM INTL on December 23, 2024 and sell it today you would lose (11.00) from holding DAIRY FARM INTL or give up 5.07% of portfolio value over 90 days.

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

DAIRY FARM INTL  vs.  Amphenol

DAIRY FARM INTL

Risk-Adjusted Performance

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

Amphenol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amphenol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with DAIRY FARM and Amphenol

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

The idea behind DAIRY FARM INTL and Amphenol 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.