Correlation Between FarmStory and Stic Investments
Can any of the company-specific risk be diversified away by investing in both FarmStory and Stic Investments 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 FarmStory and Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarmStory Co and Stic Investments, you can compare the effects of market volatilities on FarmStory and Stic Investments 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 FarmStory with a short position of Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and Stic Investments.
Diversification Opportunities for FarmStory and Stic Investments
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FarmStory and Stic is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and FarmStory 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 FarmStory Co are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of FarmStory i.e., FarmStory and Stic Investments go up and down completely randomly.
Pair Corralation between FarmStory and Stic Investments
Assuming the 90 days trading horizon FarmStory Co is expected to under-perform the Stic Investments. But the stock apears to be less risky and, when comparing its historical volatility, FarmStory Co is 1.21 times less risky than Stic Investments. The stock trades about -0.32 of its potential returns per unit of risk. The Stic Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 809,000 in Stic Investments on September 3, 2024 and sell it today you would earn a total of 19,000 from holding Stic Investments or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarmStory Co vs. Stic Investments
Performance |
| Timeline |
| FarmStory |
| Stic Investments |
FarmStory and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarmStory and Stic Investments
The main advantage of trading using opposite FarmStory and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| FarmStory vs. Hwangkum Steel Technology | FarmStory vs. KMH Hitech Co | FarmStory vs. Daiyang Metal Co | FarmStory vs. Raontech |
| Stic Investments vs. Asiana Airlines | Stic Investments vs. Daishin Information Communications | Stic Investments vs. Ssangyong Information Communication | Stic Investments vs. Nable Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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