Correlation Between ForFarmers and Amsterdam Commodities
Can any of the company-specific risk be diversified away by investing in both ForFarmers and Amsterdam Commodities 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 ForFarmers and Amsterdam Commodities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ForFarmers NV and Amsterdam Commodities NV, you can compare the effects of market volatilities on ForFarmers and Amsterdam Commodities 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 ForFarmers with a short position of Amsterdam Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ForFarmers and Amsterdam Commodities.
Diversification Opportunities for ForFarmers and Amsterdam Commodities
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ForFarmers and Amsterdam is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and Amsterdam Commodities NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amsterdam Commodities and ForFarmers 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 ForFarmers NV are associated (or correlated) with Amsterdam Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amsterdam Commodities has no effect on the direction of ForFarmers i.e., ForFarmers and Amsterdam Commodities go up and down completely randomly.
Pair Corralation between ForFarmers and Amsterdam Commodities
Assuming the 90 days trading horizon ForFarmers NV is expected to generate 1.4 times more return on investment than Amsterdam Commodities. However, ForFarmers is 1.4 times more volatile than Amsterdam Commodities NV. It trades about 0.02 of its potential returns per unit of risk. Amsterdam Commodities NV is currently generating about -0.08 per unit of risk. If you would invest 327.00 in ForFarmers NV on August 25, 2024 and sell it today you would earn a total of 1.00 from holding ForFarmers NV or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ForFarmers NV vs. Amsterdam Commodities NV
Performance |
| Timeline |
| ForFarmers NV |
| Amsterdam Commodities |
ForFarmers and Amsterdam Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ForFarmers and Amsterdam Commodities
The main advantage of trading using opposite ForFarmers and Amsterdam Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ForFarmers position performs unexpectedly, Amsterdam Commodities 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 Amsterdam Commodities will offset losses from the drop in Amsterdam Commodities' long position.| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
| Amsterdam Commodities vs. Flow Traders BV | Amsterdam Commodities vs. Aalberts Industries NV | Amsterdam Commodities vs. ForFarmers NV | Amsterdam Commodities vs. TKH Group NV |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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