Correlation Between AP Mller and Farmers
Can any of the company-specific risk be diversified away by investing in both AP Mller and Farmers 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 AP Mller and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Farmers And Merchants, you can compare the effects of market volatilities on AP Mller and Farmers 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 AP Mller with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Farmers.
Diversification Opportunities for AP Mller and Farmers
Very poor diversification
The 3 months correlation between AMKBF and Farmers is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller - and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and AP Mller 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 AP Mller are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of AP Mller i.e., AP Mller and Farmers go up and down completely randomly.
Pair Corralation between AP Mller and Farmers
Assuming the 90 days horizon AP Mller is expected to under-perform the Farmers. In addition to that, AP Mller is 3.02 times more volatile than Farmers And Merchants. It trades about -0.01 of its total potential returns per unit of risk. Farmers And Merchants is currently generating about 0.01 per unit of volatility. If you would invest 475,286 in Farmers And Merchants on December 29, 2023 and sell it today you would earn a total of 4,714 from holding Farmers And Merchants or generate 0.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
AP Mller - vs. Farmers And Merchants
Performance |
Timeline |
AP Mller - |
Farmers And Merchants |
AP Mller and Farmers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AP Mller and Farmers
The main advantage of trading using opposite AP Mller and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' long position.AP Mller vs. Kroger Company | AP Mller vs. SCOR PK | AP Mller vs. Franklin Strategic Mortgage | AP Mller vs. Barloworld Ltd ADR |
Farmers vs. Procter Gamble | Farmers vs. Ep Emerging Markets | Farmers vs. Bayview Acquisition Corp | Farmers vs. Sun Life Financial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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