Correlation Between Farmers Merchants and Klabin Sa
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Klabin Sa 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 Farmers Merchants and Klabin Sa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Merchants Bancorp and Klabin Sa A, you can compare the effects of market volatilities on Farmers Merchants and Klabin Sa 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 Farmers Merchants with a short position of Klabin Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Klabin Sa.
Diversification Opportunities for Farmers Merchants and Klabin Sa
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmers and Klabin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Klabin Sa A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klabin Sa A and Farmers Merchants 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 Farmers Merchants Bancorp are associated (or correlated) with Klabin Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klabin Sa A has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Klabin Sa go up and down completely randomly.
Pair Corralation between Farmers Merchants and Klabin Sa
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.49 times more return on investment than Klabin Sa. However, Farmers Merchants Bancorp is 2.05 times less risky than Klabin Sa. It trades about 0.04 of its potential returns per unit of risk. Klabin Sa A is currently generating about 0.0 per unit of risk. If you would invest 98,611 in Farmers Merchants Bancorp on August 31, 2024 and sell it today you would earn a total of 5,989 from holding Farmers Merchants Bancorp or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Klabin Sa A
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Klabin Sa A |
Farmers Merchants and Klabin Sa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Klabin Sa
The main advantage of trading using opposite Farmers Merchants and Klabin Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Klabin Sa 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 Klabin Sa will offset losses from the drop in Klabin Sa's long position.| Farmers Merchants vs. PSB Holdings | Farmers Merchants vs. Eagle Financial Services | Farmers Merchants vs. National Capital Bank | Farmers Merchants vs. Community Heritage Financial |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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