Correlation Between Super Retail and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Super Retail and Farm Pride 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 Super Retail and Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Retail Group and Farm Pride Foods, you can compare the effects of market volatilities on Super Retail and Farm Pride 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 Super Retail with a short position of Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Farm Pride.
Diversification Opportunities for Super Retail and Farm Pride
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Super and Farm is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods and Super Retail 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 Super Retail Group are associated (or correlated) with Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Super Retail i.e., Super Retail and Farm Pride go up and down completely randomly.
Pair Corralation between Super Retail and Farm Pride
Assuming the 90 days trading horizon Super Retail Group is expected to under-perform the Farm Pride. But the stock apears to be less risky and, when comparing its historical volatility, Super Retail Group is 3.09 times less risky than Farm Pride. The stock trades about -0.15 of its potential returns per unit of risk. The Farm Pride Foods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Farm Pride Foods on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Farm Pride Foods or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Super Retail Group vs. Farm Pride Foods
Performance |
Timeline |
Super Retail Group |
Farm Pride Foods |
Super Retail and Farm Pride Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Super Retail and Farm Pride
The main advantage of trading using opposite Super Retail and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.Super Retail vs. Microequities Asset Management | Super Retail vs. Stelar Metals | Super Retail vs. Falcon Metals | Super Retail vs. Auctus Alternative Investments |
Farm Pride vs. Aneka Tambang Tbk | Farm Pride vs. Macquarie Group | Farm Pride vs. Macquarie Group Ltd | Farm Pride vs. Challenger |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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