Correlation Between First Keystone and Farmers

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

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

Diversification Opportunities for First Keystone and Farmers

0.21

Correlation Coefficient

First Keystone  Farmers

Modest diversification

The 3 months correlation between First and Farmers is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Keystone Corp and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and First Keystone 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 First Keystone Corp are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of First Keystone i.e., First Keystone and Farmers go up and down completely randomly.

Pair Corralation between First Keystone and Farmers

Given the investment horizon of 90 days First Keystone Corp is expected to generate 6.39 times more return on investment than Farmers. However, First Keystone is 6.39 times more volatile than Farmers And Merchants. It trades about 0.03 of its potential returns per unit of risk. Farmers And Merchants is currently generating about 0.05 per unit of risk. If you would invest  1,372  in First Keystone Corp on December 28, 2024 and sell it today you would earn a total of  33.00  from holding First Keystone Corp or generate 2.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Keystone Corp  vs.  Farmers And Merchants

First Keystone Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Keystone Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First Keystone is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Farmers And Merchants

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Farmers is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Keystone and Farmers

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

The idea behind First Keystone Corp and Farmers And Merchants 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.