Correlation Between Farmmi and Planting Hope
Can any of the company-specific risk be diversified away by investing in both Farmmi and Planting Hope 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 Farmmi and Planting Hope into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and The Planting Hope, you can compare the effects of market volatilities on Farmmi and Planting Hope 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 Farmmi with a short position of Planting Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Planting Hope.
Diversification Opportunities for Farmmi and Planting Hope
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Farmmi and Planting is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and The Planting Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planting Hope and Farmmi 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 Farmmi Inc are associated (or correlated) with Planting Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planting Hope has no effect on the direction of Farmmi i.e., Farmmi and Planting Hope go up and down completely randomly.
Pair Corralation between Farmmi and Planting Hope
Given the investment horizon of 90 days Farmmi is expected to generate 131.67 times less return on investment than Planting Hope. But when comparing it to its historical volatility, Farmmi Inc is 37.93 times less risky than Planting Hope. It trades about 0.06 of its potential returns per unit of risk. The Planting Hope is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.16 in The Planting Hope on September 4, 2024 and sell it today you would earn a total of 0.00 from holding The Planting Hope or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Farmmi Inc vs. The Planting Hope
Performance |
| Timeline |
| Farmmi Inc |
| Planting Hope |
Farmmi and Planting Hope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Planting Hope
The main advantage of trading using opposite Farmmi and Planting Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Planting Hope 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 Planting Hope will offset losses from the drop in Planting Hope's long position.The idea behind Farmmi Inc and The Planting Hope 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.| Planting Hope vs. Planting Hope Co | Planting Hope vs. Pond Technologies Holdings | Planting Hope vs. Flow Beverage Corp | Planting Hope vs. Grand Havana |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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