Correlation Between DICKER DATA and Associated British

Can any of the company-specific risk be diversified away by investing in both DICKER DATA and Associated British 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 DICKER DATA and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DICKER DATA LTD and Associated British Foods, you can compare the effects of market volatilities on DICKER DATA and Associated British 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 DICKER DATA with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKER DATA and Associated British.

Diversification Opportunities for DICKER DATA and Associated British

0.33

Correlation Coefficient

DICKER DATA  Associated British

Weak diversification

The 3 months correlation between DICKER and Associated is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding DICKER DATA LTD and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and DICKER DATA 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 DICKER DATA LTD are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of DICKER DATA i.e., DICKER DATA and Associated British go up and down completely randomly.

Pair Corralation between DICKER DATA and Associated British

Assuming the 90 days horizon DICKER DATA LTD is expected to under-perform the Associated British. In addition to that, DICKER DATA is 1.23 times more volatile than Associated British Foods. It trades about -0.02 of its total potential returns per unit of risk. Associated British Foods is currently generating about 0.02 per unit of volatility. If you would invest  2,544  in Associated British Foods on September 15, 2024 and sell it today you would earn a total of  36.00  from holding Associated British Foods or generate 1.42% return on investment over 90 days.

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

DICKER DATA LTD  vs.  Associated British Foods

DICKER DATA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKER DATA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DICKER DATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Associated British Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Associated British Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Associated British is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DICKER DATA and Associated British

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

The idea behind DICKER DATA LTD and Associated British Foods 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.