Correlation Between FarmStory and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both FarmStory and ABCO Electronics 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 ABCO Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarmStory Co and ABCO Electronics Co, you can compare the effects of market volatilities on FarmStory and ABCO Electronics 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 ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and ABCO Electronics.
Diversification Opportunities for FarmStory and ABCO Electronics
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FarmStory and ABCO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics 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 ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of FarmStory i.e., FarmStory and ABCO Electronics go up and down completely randomly.
Pair Corralation between FarmStory and ABCO Electronics
Assuming the 90 days trading horizon FarmStory Co is expected to generate 0.52 times more return on investment than ABCO Electronics. However, FarmStory Co is 1.94 times less risky than ABCO Electronics. It trades about -0.06 of its potential returns per unit of risk. ABCO Electronics Co is currently generating about -0.14 per unit of risk. If you would invest 158,484 in FarmStory Co on August 29, 2024 and sell it today you would lose (37,884) from holding FarmStory Co or give up 23.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarmStory Co vs. ABCO Electronics Co
Performance |
| Timeline |
| FarmStory |
| ABCO Electronics |
FarmStory and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarmStory and ABCO Electronics
The main advantage of trading using opposite FarmStory and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory position performs unexpectedly, ABCO Electronics 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| FarmStory vs. Samsung Electronics Co | FarmStory vs. Samsung Electronics Co | FarmStory vs. Hyundai Motor Co | FarmStory vs. Hyundai Motor |
| ABCO Electronics vs. BNK Financial Group | ABCO Electronics vs. Dgb Financial | ABCO Electronics vs. DB Insurance Co | ABCO Electronics vs. KB Financial Group |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |