Correlation Between Gol Intelligent and Dairy Farm

Can any of the company-specific risk be diversified away by investing in both Gol Intelligent and Dairy Farm 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 Gol Intelligent and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gol Intelligent Airlines and Dairy Farm International, you can compare the effects of market volatilities on Gol Intelligent and Dairy Farm 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 Gol Intelligent with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Intelligent and Dairy Farm.

Diversification Opportunities for Gol Intelligent and Dairy Farm

0.0

Correlation Coefficient

Gol Intelligent  Dairy Farm

Pay attention - limited upside

The 3 months correlation between Gol and Dairy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and Gol Intelligent 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 Gol Intelligent Airlines are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Gol Intelligent i.e., Gol Intelligent and Dairy Farm go up and down completely randomly.

Pair Corralation between Gol Intelligent and Dairy Farm

If you would invest  203.00  in Dairy Farm International on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Dairy Farm International or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Gol Intelligent Airlines  vs.  Dairy Farm International

Gol Intelligent Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gol Intelligent Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gol Intelligent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dairy Farm International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dairy Farm is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gol Intelligent and Dairy Farm

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

The idea behind Gol Intelligent Airlines and Dairy Farm International 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.