Correlation Between ISS AS and First Farms
Can any of the company-specific risk be diversified away by investing in both ISS AS and First Farms 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 ISS AS and First Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ISS AS and First Farms AS, you can compare the effects of market volatilities on ISS AS and First Farms 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 ISS AS with a short position of First Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISS AS and First Farms.
Diversification Opportunities for ISS AS and First Farms
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ISS and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ISS AS and First Farms AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Farms AS and ISS AS 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 ISS AS are associated (or correlated) with First Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Farms AS has no effect on the direction of ISS AS i.e., ISS AS and First Farms go up and down completely randomly.
Pair Corralation between ISS AS and First Farms
Assuming the 90 days trading horizon ISS AS is expected to generate 0.96 times more return on investment than First Farms. However, ISS AS is 1.04 times less risky than First Farms. It trades about 0.0 of its potential returns per unit of risk. First Farms AS is currently generating about 0.0 per unit of risk. If you would invest 14,570 in ISS AS on November 5, 2024 and sell it today you would lose (970.00) from holding ISS AS or give up 6.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ISS AS vs. First Farms AS
Performance |
| Timeline |
| ISS AS |
| First Farms AS |
ISS AS and First Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISS AS and First Farms
The main advantage of trading using opposite ISS AS and First Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISS AS position performs unexpectedly, First Farms 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 First Farms will offset losses from the drop in First Farms' long position.The idea behind ISS AS and First Farms AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Farms vs. HH International AS | First Farms vs. SKAKO AS | First Farms vs. Spar Nord Bank | First Farms vs. Matas 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |