Correlation Between First Farms and SKAKO AS
Can any of the company-specific risk be diversified away by investing in both First Farms and SKAKO AS 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 First Farms and SKAKO AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Farms AS and SKAKO AS, you can compare the effects of market volatilities on First Farms and SKAKO AS 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 First Farms with a short position of SKAKO AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Farms and SKAKO AS.
Diversification Opportunities for First Farms and SKAKO AS
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and SKAKO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Farms AS and SKAKO AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAKO AS and First Farms 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 First Farms AS are associated (or correlated) with SKAKO AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAKO AS has no effect on the direction of First Farms i.e., First Farms and SKAKO AS go up and down completely randomly.
Pair Corralation between First Farms and SKAKO AS
Assuming the 90 days trading horizon First Farms AS is expected to under-perform the SKAKO AS. In addition to that, First Farms is 1.23 times more volatile than SKAKO AS. It trades about -0.05 of its total potential returns per unit of risk. SKAKO AS is currently generating about 0.27 per unit of volatility. If you would invest 7,960 in SKAKO AS on October 26, 2024 and sell it today you would earn a total of 460.00 from holding SKAKO AS or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Farms AS vs. SKAKO AS
Performance |
| Timeline |
| First Farms AS |
| SKAKO AS |
First Farms and SKAKO AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Farms and SKAKO AS
The main advantage of trading using opposite First Farms and SKAKO AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Farms position performs unexpectedly, SKAKO AS 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 SKAKO AS will offset losses from the drop in SKAKO AS's long position.| First Farms vs. HH International AS | First Farms vs. SKAKO AS | First Farms vs. Spar Nord Bank | First Farms vs. Matas AS |
| SKAKO AS vs. North Media AS | SKAKO AS vs. HH International AS | SKAKO AS vs. Per Aarsleff Holding | SKAKO AS vs. First Farms AS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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