Correlation Between FARM 51 and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both FARM 51 and WIMFARM SA 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 FARM 51 and WIMFARM SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and WIMFARM SA EO, you can compare the effects of market volatilities on FARM 51 and WIMFARM SA 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 FARM 51 with a short position of WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and WIMFARM SA.
Diversification Opportunities for FARM 51 and WIMFARM SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FARM and WIMFARM is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO and FARM 51 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 FARM 51 GROUP are associated (or correlated) with WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of FARM 51 i.e., FARM 51 and WIMFARM SA go up and down completely randomly.
Pair Corralation between FARM 51 and WIMFARM SA
Assuming the 90 days horizon FARM 51 is expected to generate 4.03 times less return on investment than WIMFARM SA. But when comparing it to its historical volatility, FARM 51 GROUP is 2.03 times less risky than WIMFARM SA. It trades about 0.05 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 323.00 in WIMFARM SA EO on October 28, 2024 and sell it today you would earn a total of 52.00 from holding WIMFARM SA EO or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. WIMFARM SA EO
Performance |
| Timeline |
| FARM 51 GROUP |
| WIMFARM SA EO |
FARM 51 and WIMFARM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and WIMFARM SA
The main advantage of trading using opposite FARM 51 and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.The idea behind FARM 51 GROUP and WIMFARM SA EO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| WIMFARM SA vs. TYSON FOODS A | WIMFARM SA vs. Air Lease | WIMFARM SA vs. CAL MAINE FOODS | WIMFARM SA vs. Ebro Foods SA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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