Correlation Between Farm Pride and Bellevue Gold

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

Diversification Opportunities for Farm Pride and Bellevue Gold

-0.19

Correlation Coefficient

Farm Pride  Bellevue Gold

Good diversification

The 3 months correlation between Farm and Bellevue is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Bellevue Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Gold 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 Bellevue Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Gold has no effect on the direction of Farm Pride i.e., Farm Pride and Bellevue Gold go up and down completely randomly.

Pair Corralation between Farm Pride and Bellevue Gold

Assuming the 90 days trading horizon Farm Pride is expected to generate 1.65 times less return on investment than Bellevue Gold. In addition to that, Farm Pride is 1.84 times more volatile than Bellevue Gold. It trades about 0.02 of its total potential returns per unit of risk. Bellevue Gold is currently generating about 0.08 per unit of volatility. If you would invest  124.00  in Bellevue Gold on September 13, 2024 and sell it today you would earn a total of  14.00  from holding Bellevue Gold or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Farm Pride Foods  vs.  Bellevue Gold

Farm Pride Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Farm Pride Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Farm Pride may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bellevue Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bellevue Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Bellevue Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farm Pride and Bellevue Gold

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

The idea behind Farm Pride Foods and Bellevue Gold 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.