Correlation Between Farmmi and Steakholder Foods
Can any of the company-specific risk be diversified away by investing in both Farmmi and Steakholder Foods 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 Steakholder Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and Steakholder Foods, you can compare the effects of market volatilities on Farmmi and Steakholder Foods 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 Steakholder Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Steakholder Foods.
Diversification Opportunities for Farmmi and Steakholder Foods
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farmmi and Steakholder is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and Steakholder Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steakholder Foods 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 Steakholder Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steakholder Foods has no effect on the direction of Farmmi i.e., Farmmi and Steakholder Foods go up and down completely randomly.
Pair Corralation between Farmmi and Steakholder Foods
Given the investment horizon of 90 days Farmmi Inc is expected to generate 1.13 times more return on investment than Steakholder Foods. However, Farmmi is 1.13 times more volatile than Steakholder Foods. It trades about 0.06 of its potential returns per unit of risk. Steakholder Foods is currently generating about -0.15 per unit of risk. If you would invest 28.00 in Farmmi Inc on October 23, 2024 and sell it today you would earn a total of 2.00 from holding Farmmi Inc or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmmi Inc vs. Steakholder Foods
Performance |
| Timeline |
| Farmmi Inc |
| Steakholder Foods |
Farmmi and Steakholder Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Steakholder Foods
The main advantage of trading using opposite Farmmi and Steakholder Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Steakholder Foods 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 Steakholder Foods will offset losses from the drop in Steakholder Foods' long position.| Farmmi vs. Bit Origin | Farmmi vs. Better Choice | Farmmi vs. Laird Superfood | Farmmi vs. Arcadia Biosciences |
| Steakholder Foods vs. Farmmi Inc | Steakholder Foods vs. Herbalife Nutrition | Steakholder Foods vs. Beyond Meat | Steakholder Foods vs. Bit Origin |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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