Correlation Between ForFarmers and Cicor Technologies
Can any of the company-specific risk be diversified away by investing in both ForFarmers and Cicor Technologies 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 Cicor Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ForFarmers NV and Cicor Technologies, you can compare the effects of market volatilities on ForFarmers and Cicor Technologies 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 Cicor Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ForFarmers and Cicor Technologies.
Diversification Opportunities for ForFarmers and Cicor Technologies
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ForFarmers and Cicor is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and Cicor Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cicor Technologies 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 Cicor Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cicor Technologies has no effect on the direction of ForFarmers i.e., ForFarmers and Cicor Technologies go up and down completely randomly.
Pair Corralation between ForFarmers and Cicor Technologies
Assuming the 90 days trading horizon ForFarmers NV is expected to under-perform the Cicor Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ForFarmers NV is 1.5 times less risky than Cicor Technologies. The stock trades about -0.2 of its potential returns per unit of risk. The Cicor Technologies is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,260 in Cicor Technologies on September 2, 2024 and sell it today you would earn a total of 640.00 from holding Cicor Technologies or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ForFarmers NV vs. Cicor Technologies
Performance |
| Timeline |
| ForFarmers NV |
| Cicor Technologies |
ForFarmers and Cicor Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ForFarmers and Cicor Technologies
The main advantage of trading using opposite ForFarmers and Cicor Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ForFarmers position performs unexpectedly, Cicor Technologies 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 Cicor Technologies will offset losses from the drop in Cicor Technologies' long position.| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
| Cicor Technologies vs. Jungfraubahn Holding AG | Cicor Technologies vs. Amsterdam Commodities NV | Cicor Technologies vs. Flow Traders BV | Cicor Technologies vs. ForFarmers 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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