Correlation Between FarmStory and IM CoLtd
Can any of the company-specific risk be diversified away by investing in both FarmStory and IM CoLtd 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 IM CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarmStory Co and IM CoLtd, you can compare the effects of market volatilities on FarmStory and IM CoLtd 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 IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and IM CoLtd.
Diversification Opportunities for FarmStory and IM CoLtd
Poor diversification
The 3 months correlation between FarmStory and 101390 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd 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 IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of FarmStory i.e., FarmStory and IM CoLtd go up and down completely randomly.
Pair Corralation between FarmStory and IM CoLtd
Assuming the 90 days trading horizon FarmStory Co is expected to generate 0.54 times more return on investment than IM CoLtd. However, FarmStory Co is 1.87 times less risky than IM CoLtd. It trades about -0.32 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.25 per unit of risk. If you would invest 130,800 in FarmStory Co on September 3, 2024 and sell it today you would lose (14,800) from holding FarmStory Co or give up 11.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarmStory Co vs. IM CoLtd
Performance |
| Timeline |
| FarmStory |
| IM CoLtd |
FarmStory and IM CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarmStory and IM CoLtd
The main advantage of trading using opposite FarmStory and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd's long position.| FarmStory vs. Hwangkum Steel Technology | FarmStory vs. KMH Hitech Co | FarmStory vs. Daiyang Metal Co | FarmStory vs. Raontech |
| IM CoLtd vs. LG Electronics Pfd | IM CoLtd vs. Sunny Electronics Corp | IM CoLtd vs. Dongbang Transport Logistics | IM CoLtd vs. Daeduck Electronics Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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