Correlation Between Retail Food and Apiam Animal

Can any of the company-specific risk be diversified away by investing in both Retail Food and Apiam Animal 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 Retail Food and Apiam Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Retail Food Group and Apiam Animal Health, you can compare the effects of market volatilities on Retail Food and Apiam Animal 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 Retail Food with a short position of Apiam Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Apiam Animal.

Diversification Opportunities for Retail Food and Apiam Animal

-0.49

Correlation Coefficient

Retail Food  Apiam Animal

Very good diversification

The 3 months correlation between Retail and Apiam is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Apiam Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apiam Animal Health and Retail Food 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 Retail Food Group are associated (or correlated) with Apiam Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apiam Animal Health has no effect on the direction of Retail Food i.e., Retail Food and Apiam Animal go up and down completely randomly.

Pair Corralation between Retail Food and Apiam Animal

Assuming the 90 days trading horizon Retail Food Group is expected to generate 0.33 times more return on investment than Apiam Animal. However, Retail Food Group is 2.99 times less risky than Apiam Animal. It trades about -0.1 of its potential returns per unit of risk. Apiam Animal Health is currently generating about -0.19 per unit of risk. If you would invest  296.00  in Retail Food Group on September 18, 2024 and sell it today you would lose (8.00) from holding Retail Food Group or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Retail Food Group  vs.  Apiam Animal Health

Retail Food Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Food Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Retail Food may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apiam Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apiam Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Retail Food and Apiam Animal

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

The idea behind Retail Food Group and Apiam Animal Health 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..