Correlation Between FarmStory and TES
Can any of the company-specific risk be diversified away by investing in both FarmStory and TES 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 TES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarmStory Co and TES Co, you can compare the effects of market volatilities on FarmStory and TES 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 TES. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and TES.
Diversification Opportunities for FarmStory and TES
Almost no diversification
The 3 months correlation between FarmStory and TES is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and TES Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TES Co 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 TES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TES Co has no effect on the direction of FarmStory i.e., FarmStory and TES go up and down completely randomly.
Pair Corralation between FarmStory and TES
Assuming the 90 days trading horizon FarmStory Co is expected to under-perform the TES. But the stock apears to be less risky and, when comparing its historical volatility, FarmStory Co is 1.26 times less risky than TES. The stock trades about -0.03 of its potential returns per unit of risk. The TES Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,649,269 in TES Co on August 30, 2024 and sell it today you would lose (175,269) from holding TES Co or give up 10.63% 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. TES Co
Performance |
| Timeline |
| FarmStory |
| TES Co |
FarmStory and TES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarmStory and TES
The main advantage of trading using opposite FarmStory and TES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory position performs unexpectedly, TES 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 TES will offset losses from the drop in TES's long position.| FarmStory vs. Samsung Electronics Co | FarmStory vs. Samsung Electronics Co | FarmStory vs. Hyundai Motor Co | FarmStory vs. Hyundai Motor |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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