Correlation Between Dairy Farm and Village Super

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

Diversification Opportunities for Dairy Farm and Village Super

0.15

Correlation Coefficient

Dairy Farm  Village Super

Average diversification

The 3 months correlation between Dairy and Village is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market 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 Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of Dairy Farm i.e., Dairy Farm and Village Super go up and down completely randomly.

Pair Corralation between Dairy Farm and Village Super

If you would invest  215.00  in Dairy Farm International on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Dairy Farm International or generate 0.0% return on investment over 90 days.

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

Dairy Farm International  vs.  Village Super Market

Dairy Farm International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Dairy Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Village Super Market

Risk-Adjusted Performance

Very Weak

Over the last 90 days Village Super Market has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Village Super is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dairy Farm and Village Super

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

The idea behind Dairy Farm International and Village Super Market 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.