Correlation Between Agro Tech and FSN E-Commerce

Can any of the company-specific risk be diversified away by investing in both Agro Tech and FSN E-Commerce 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 Agro Tech and FSN E-Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agro Tech Foods and FSN E Commerce Ventures, you can compare the effects of market volatilities on Agro Tech and FSN E-Commerce 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 Agro Tech with a short position of FSN E-Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and FSN E-Commerce.

Diversification Opportunities for Agro Tech and FSN E-Commerce

-0.01

Correlation Coefficient

Agro Tech  FSN E-Commerce

Good diversification

The 3 months correlation between Agro and FSN is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and FSN E Commerce Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSN E Commerce and Agro Tech 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 Agro Tech Foods are associated (or correlated) with FSN E-Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSN E Commerce has no effect on the direction of Agro Tech i.e., Agro Tech and FSN E-Commerce go up and down completely randomly.

Pair Corralation between Agro Tech and FSN E-Commerce

Assuming the 90 days trading horizon Agro Tech Foods is expected to under-perform the FSN E-Commerce. In addition to that, Agro Tech is 1.06 times more volatile than FSN E Commerce Ventures. It trades about -0.08 of its total potential returns per unit of risk. FSN E Commerce Ventures is currently generating about 0.05 per unit of volatility. If you would invest  16,005  in FSN E Commerce Ventures on December 21, 2024 and sell it today you would earn a total of  803.00  from holding FSN E Commerce Ventures or generate 5.02% return on investment over 90 days.

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

Agro Tech Foods  vs.  FSN E Commerce Ventures

Agro Tech Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agro Tech Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FSN E Commerce

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FSN E Commerce Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, FSN E-Commerce is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Agro Tech and FSN E-Commerce

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

The idea behind Agro Tech Foods and FSN E Commerce Ventures 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.