Correlation Between Seven West and DAIRY FARM

Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seven West Media and DAIRY FARM INTL, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and DAIRY FARM.

Diversification Opportunities for Seven West and DAIRY FARM

-0.61

Correlation Coefficient

Seven West  DAIRY FARM

Excellent diversification

The 3 months correlation between Seven and DAIRY is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL and Seven West 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 Seven West Media 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 INTL has no effect on the direction of Seven West i.e., Seven West and DAIRY FARM go up and down completely randomly.

Pair Corralation between Seven West and DAIRY FARM

Assuming the 90 days horizon Seven West Media is expected to under-perform the DAIRY FARM. In addition to that, Seven West is 1.48 times more volatile than DAIRY FARM INTL. It trades about -0.18 of its total potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.01 per unit of volatility. If you would invest  220.00  in DAIRY FARM INTL on September 16, 2024 and sell it today you would lose (2.00) from holding DAIRY FARM INTL or give up 0.91% of portfolio value over 90 days.

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

Seven West Media  vs.  DAIRY FARM INTL

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seven West Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DAIRY FARM INTL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seven West and DAIRY FARM

The main advantage of trading using opposite Seven West and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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 Seven West Media and DAIRY FARM INTL 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 Stocks Directory module to find actively traded stocks across global markets.