Correlation Between Armada Hflr and FARM 51

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and FARM 51 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 Armada Hflr and FARM 51 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and FARM 51 GROUP, you can compare the effects of market volatilities on Armada Hflr and FARM 51 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 Armada Hflr with a short position of FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and FARM 51.

Diversification Opportunities for Armada Hflr and FARM 51

0.24

Correlation Coefficient

Armada Hflr  FARM 51

Modest diversification

The 3 months correlation between Armada and FARM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of Armada Hflr i.e., Armada Hflr and FARM 51 go up and down completely randomly.

Pair Corralation between Armada Hflr and FARM 51

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the FARM 51. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 2.0 times less risky than FARM 51. The stock trades about -0.01 of its potential returns per unit of risk. The FARM 51 GROUP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  318.00  in FARM 51 GROUP on October 3, 2024 and sell it today you would lose (24.00) from holding FARM 51 GROUP or give up 7.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.26%
Values	Daily Returns

Armada Hflr Pr  vs.  FARM 51 GROUP

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

FARM 51 GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FARM 51 GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FARM 51 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Hflr and FARM 51

The main advantage of trading using opposite Armada Hflr and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.

The idea behind Armada Hflr Pr and FARM 51 GROUP 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 Transaction History module to view history of all your transactions and understand their impact on performance.