Correlation Between FarmStory and Aprogen Healthcare

Can any of the company-specific risk be diversified away by investing in both FarmStory and Aprogen Healthcare 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 FarmStory and Aprogen Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FarmStory Co and Aprogen Healthcare Games, you can compare the effects of market volatilities on FarmStory and Aprogen Healthcare 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 FarmStory with a short position of Aprogen Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarmStory and Aprogen Healthcare.

Diversification Opportunities for FarmStory and Aprogen Healthcare

-0.09

Correlation Coefficient

FarmStory  Aprogen Healthcare

Good diversification

The 3 months correlation between FarmStory and Aprogen is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and Aprogen Healthcare Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen Healthcare Games and FarmStory 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 FarmStory Co are associated (or correlated) with Aprogen Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen Healthcare Games has no effect on the direction of FarmStory i.e., FarmStory and Aprogen Healthcare go up and down completely randomly.

Pair Corralation between FarmStory and Aprogen Healthcare

Assuming the 90 days trading horizon FarmStory Co is expected to generate 0.44 times more return on investment than Aprogen Healthcare. However, FarmStory Co is 2.28 times less risky than Aprogen Healthcare. It trades about 0.07 of its potential returns per unit of risk. Aprogen Healthcare Games is currently generating about -0.02 per unit of risk. If you would invest  114,300  in FarmStory Co on December 30, 2024 and sell it today you would earn a total of  5,600  from holding FarmStory Co or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FarmStory Co  vs.  Aprogen Healthcare Games

FarmStory

Risk-Adjusted Performance

Modest

Over the last 90 days FarmStory Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FarmStory is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aprogen Healthcare Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aprogen Healthcare Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aprogen Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FarmStory and Aprogen Healthcare

The main advantage of trading using opposite FarmStory and Aprogen Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarmStory position performs unexpectedly, Aprogen Healthcare 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 Aprogen Healthcare will offset losses from the drop in Aprogen Healthcare's long position.

The idea behind FarmStory Co and Aprogen Healthcare Games 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.