Correlation Between Big Rock and Farmmi
Can any of the company-specific risk be diversified away by investing in both Big Rock and Farmmi 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 Big Rock and Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and Farmmi Inc, you can compare the effects of market volatilities on Big Rock and Farmmi 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 Big Rock with a short position of Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Farmmi.
Diversification Opportunities for Big Rock and Farmmi
Very good diversification
The 3 months correlation between Big and Farmmi is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and Big Rock 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 Big Rock Brewery are associated (or correlated) with Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Big Rock i.e., Big Rock and Farmmi go up and down completely randomly.
Pair Corralation between Big Rock and Farmmi
Assuming the 90 days horizon Big Rock Brewery is expected to generate 0.76 times more return on investment than Farmmi. However, Big Rock Brewery is 1.32 times less risky than Farmmi. It trades about 0.05 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.06 per unit of risk. If you would invest 107.00 in Big Rock Brewery on August 27, 2024 and sell it today you would earn a total of 23.00 from holding Big Rock Brewery or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.65% |
| Values | Daily Returns |
Big Rock Brewery vs. Farmmi Inc
Performance |
| Timeline |
| Big Rock Brewery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Farmmi Inc |
Big Rock and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and Farmmi
The main advantage of trading using opposite Big Rock and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.| Big Rock vs. Molson Coors Brewing | Big Rock vs. Fomento Economico Mexicano | Big Rock vs. Compania Cervecerias Unidas | Big Rock vs. Anheuser Busch Inbev |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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