Correlation Between Farm Pride and Aspire Mining
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Aspire Mining 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 Farm Pride and Aspire Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farm Pride Foods and Aspire Mining, you can compare the effects of market volatilities on Farm Pride and Aspire Mining 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 Farm Pride with a short position of Aspire Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Aspire Mining.
Diversification Opportunities for Farm Pride and Aspire Mining
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farm and Aspire is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Aspire Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspire Mining and Farm Pride 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 Farm Pride Foods are associated (or correlated) with Aspire Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspire Mining has no effect on the direction of Farm Pride i.e., Farm Pride and Aspire Mining go up and down completely randomly.
Pair Corralation between Farm Pride and Aspire Mining
Assuming the 90 days trading horizon Farm Pride is expected to generate 1.63 times less return on investment than Aspire Mining. In addition to that, Farm Pride is 1.13 times more volatile than Aspire Mining. It trades about 0.02 of its total potential returns per unit of risk. Aspire Mining is currently generating about 0.05 per unit of volatility. If you would invest 28.00 in Aspire Mining on September 15, 2024 and sell it today you would earn a total of 2.00 from holding Aspire Mining or generate 7.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Farm Pride Foods vs. Aspire Mining
Performance |
Timeline |
Farm Pride Foods |
Aspire Mining |
Farm Pride and Aspire Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Farm Pride and Aspire Mining
The main advantage of trading using opposite Farm Pride and Aspire Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Aspire Mining 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 Aspire Mining will offset losses from the drop in Aspire Mining's long position.Farm Pride vs. ARN Media Limited | Farm Pride vs. Premier Investments | Farm Pride vs. BKI Investment | Farm Pride vs. Garda Diversified Ppty |
Aspire Mining vs. Janison Education Group | Aspire Mining vs. Farm Pride Foods | Aspire Mining vs. Queste Communications | Aspire Mining vs. IDP Education |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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