Correlation Between CubicFarm Systems and American Premium
Can any of the company-specific risk be diversified away by investing in both CubicFarm Systems and American Premium 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 CubicFarm Systems and American Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubicFarm Systems Corp and American Premium Water, you can compare the effects of market volatilities on CubicFarm Systems and American Premium 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 CubicFarm Systems with a short position of American Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubicFarm Systems and American Premium.
Diversification Opportunities for CubicFarm Systems and American Premium
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CubicFarm and American is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CubicFarm Systems Corp and American Premium Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Premium Water and CubicFarm Systems 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 CubicFarm Systems Corp are associated (or correlated) with American Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Premium Water has no effect on the direction of CubicFarm Systems i.e., CubicFarm Systems and American Premium go up and down completely randomly.
Pair Corralation between CubicFarm Systems and American Premium
Assuming the 90 days horizon CubicFarm Systems is expected to generate 1.42 times less return on investment than American Premium. But when comparing it to its historical volatility, CubicFarm Systems Corp is 1.62 times less risky than American Premium. It trades about 0.22 of its potential returns per unit of risk. American Premium Water is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.01 in American Premium Water on September 2, 2024 and sell it today you would earn a total of 0.00 from holding American Premium Water or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
CubicFarm Systems Corp vs. American Premium Water
Performance |
| Timeline |
| CubicFarm Systems Corp |
| American Premium Water |
CubicFarm Systems and American Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubicFarm Systems and American Premium
The main advantage of trading using opposite CubicFarm Systems and American Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubicFarm Systems position performs unexpectedly, American Premium 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 American Premium will offset losses from the drop in American Premium's long position.| CubicFarm Systems vs. Lion Electric Corp | CubicFarm Systems vs. Nikola Corp | CubicFarm Systems vs. Buhler Industries | CubicFarm Systems vs. Toyota Industries |
| American Premium vs. First Tractor | American Premium vs. Ag Growth International | American Premium vs. AmeraMex International | American Premium vs. Arts Way Manufacturing 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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