Correlation Between BANKINTER ADR and DAIRY FARM

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

By analyzing existing cross correlation between BANKINTER ADR 2007 and DAIRY FARM INTL, you can compare the effects of market volatilities on BANKINTER ADR 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 BANKINTER ADR with a short position of DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and DAIRY FARM.

Diversification Opportunities for BANKINTER ADR and DAIRY FARM

0.69

Correlation Coefficient

BANKINTER ADR  DAIRY FARM

Poor diversification

The 3 months correlation between BANKINTER and DAIRY is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 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 BANKINTER ADR 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 BANKINTER ADR 2007 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 BANKINTER ADR i.e., BANKINTER ADR and DAIRY FARM go up and down completely randomly.

Pair Corralation between BANKINTER ADR and DAIRY FARM

Assuming the 90 days horizon BANKINTER ADR is expected to generate 1.3 times less return on investment than DAIRY FARM. But when comparing it to its historical volatility, BANKINTER ADR 2007 is 1.31 times less risky than DAIRY FARM. It trades about 0.17 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  214.00  in DAIRY FARM INTL on April 24, 2025 and sell it today you would earn a total of  44.00  from holding DAIRY FARM INTL or generate 20.56% return on investment over 90 days.

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

BANKINTER ADR 2007  vs.  DAIRY FARM INTL

BANKINTER ADR 2007

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, BANKINTER ADR reported solid returns over the last few months and may actually be approaching a breakup point.

DAIRY FARM INTL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANKINTER ADR and DAIRY FARM

The main advantage of trading using opposite BANKINTER ADR and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANKINTER ADR 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 BANKINTER ADR 2007 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.