Correlation Between Altium and Farmers Edge

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

By analyzing existing cross correlation between Altium Limited and Farmers Edge, you can compare the effects of market volatilities on Altium and Farmers Edge 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 Altium with a short position of Farmers Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altium and Farmers Edge.

Diversification Opportunities for Altium and Farmers Edge

0.0

Correlation Coefficient

Altium  Farmers Edge

Pay attention - limited upside

The 3 months correlation between Altium and Farmers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altium Limited and Farmers Edge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Edge and Altium 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 Altium Limited are associated (or correlated) with Farmers Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Edge has no effect on the direction of Altium i.e., Altium and Farmers Edge go up and down completely randomly.

Pair Corralation between Altium and Farmers Edge

If you would invest (100.00) in Farmers Edge on December 20, 2024 and sell it today you would earn a total of  100.00  from holding Farmers Edge or generate -100.0% return on investment over 90 days.

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

Altium Limited  vs.  Farmers Edge

Altium Limited

Risk-Adjusted Performance

Very Weak

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

Farmers Edge

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Altium and Farmers Edge

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

The idea behind Altium Limited and Farmers Edge 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.