Correlation Between Better Choice and Farmmi
Can any of the company-specific risk be diversified away by investing in both Better Choice 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 Better Choice and Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better Choice and Farmmi Inc, you can compare the effects of market volatilities on Better Choice 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 Better Choice with a short position of Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Choice and Farmmi.
Diversification Opportunities for Better Choice and Farmmi
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Better and Farmmi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Better Choice and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and Better Choice 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 Better Choice 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 Better Choice i.e., Better Choice and Farmmi go up and down completely randomly.
Pair Corralation between Better Choice and Farmmi
Given the investment horizon of 90 days Better Choice is expected to under-perform the Farmmi. In addition to that, Better Choice is 1.5 times more volatile than Farmmi Inc. It trades about -0.04 of its total potential returns per unit of risk. Farmmi Inc is currently generating about -0.05 per unit of volatility. If you would invest 125.00 in Farmmi Inc on August 27, 2024 and sell it today you would lose (97.00) from holding Farmmi Inc or give up 77.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better Choice vs. Farmmi Inc
Performance |
| Timeline |
| Better Choice |
| Farmmi Inc |
Better Choice and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better Choice and Farmmi
The main advantage of trading using opposite Better Choice and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better Choice 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.| Better Choice vs. Blue Star Foods | Better Choice vs. Stryve Foods | Better Choice vs. BioAdaptives | Better Choice vs. Beyond Oil |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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