Correlation Between LIVESTOCK FEED and AFRICAN DOMESTIC

Can any of the company-specific risk be diversified away by investing in both LIVESTOCK FEED and AFRICAN DOMESTIC 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 LIVESTOCK FEED and AFRICAN DOMESTIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LIVESTOCK FEED LTD and AFRICAN DOMESTIC BOND, you can compare the effects of market volatilities on LIVESTOCK FEED and AFRICAN DOMESTIC 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 LIVESTOCK FEED with a short position of AFRICAN DOMESTIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIVESTOCK FEED and AFRICAN DOMESTIC.

Diversification Opportunities for LIVESTOCK FEED and AFRICAN DOMESTIC

-0.26

Correlation Coefficient

LIVESTOCK FEED  AFRICAN DOMESTIC

Very good diversification

The 3 months correlation between LIVESTOCK and AFRICAN is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding LIVESTOCK FEED LTD and AFRICAN DOMESTIC BOND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFRICAN DOMESTIC BOND and LIVESTOCK FEED 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 LIVESTOCK FEED LTD are associated (or correlated) with AFRICAN DOMESTIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFRICAN DOMESTIC BOND has no effect on the direction of LIVESTOCK FEED i.e., LIVESTOCK FEED and AFRICAN DOMESTIC go up and down completely randomly.

Pair Corralation between LIVESTOCK FEED and AFRICAN DOMESTIC

Assuming the 90 days trading horizon LIVESTOCK FEED LTD is expected to generate 1.23 times more return on investment than AFRICAN DOMESTIC. However, LIVESTOCK FEED is 1.23 times more volatile than AFRICAN DOMESTIC BOND. It trades about -0.01 of its potential returns per unit of risk. AFRICAN DOMESTIC BOND is currently generating about -0.06 per unit of risk. If you would invest  2,060  in LIVESTOCK FEED LTD on September 26, 2024 and sell it today you would lose (145.00) from holding LIVESTOCK FEED LTD or give up 7.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.73%
Values	Daily Returns

LIVESTOCK FEED LTD  vs.  AFRICAN DOMESTIC BOND

LIVESTOCK FEED LTD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LIVESTOCK FEED LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, LIVESTOCK FEED is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AFRICAN DOMESTIC BOND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFRICAN DOMESTIC BOND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AFRICAN DOMESTIC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LIVESTOCK FEED and AFRICAN DOMESTIC

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

The idea behind LIVESTOCK FEED LTD and AFRICAN DOMESTIC BOND 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..