Correlation Between TKH Group and ForFarmers
Can any of the company-specific risk be diversified away by investing in both TKH Group and ForFarmers 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 TKH Group and ForFarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKH Group NV and ForFarmers NV, you can compare the effects of market volatilities on TKH Group and ForFarmers 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 TKH Group with a short position of ForFarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKH Group and ForFarmers.
Diversification Opportunities for TKH Group and ForFarmers
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between TKH and ForFarmers is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and TKH Group 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 TKH Group NV are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of TKH Group i.e., TKH Group and ForFarmers go up and down completely randomly.
Pair Corralation between TKH Group and ForFarmers
Assuming the 90 days trading horizon TKH Group NV is expected to under-perform the ForFarmers. In addition to that, TKH Group is 1.31 times more volatile than ForFarmers NV. It trades about -0.15 of its total potential returns per unit of risk. ForFarmers NV is currently generating about 0.07 per unit of volatility. If you would invest 305.00 in ForFarmers NV on September 1, 2024 and sell it today you would earn a total of 18.00 from holding ForFarmers NV or generate 5.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
TKH Group NV vs. ForFarmers NV
Performance |
Timeline |
TKH Group NV |
ForFarmers NV |
TKH Group and ForFarmers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TKH Group and ForFarmers
The main advantage of trading using opposite TKH Group and ForFarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKH Group position performs unexpectedly, ForFarmers 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 ForFarmers will offset losses from the drop in ForFarmers' long position.TKH Group vs. Aalberts Industries NV | TKH Group vs. BE Semiconductor Industries | TKH Group vs. AMG Advanced Metallurgical | TKH Group vs. Koninklijke Vopak NV |
ForFarmers vs. TKH Group NV | ForFarmers vs. Brunel International NV | ForFarmers vs. Koninklijke BAM Groep | ForFarmers vs. Koninklijke Vopak NV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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