Correlation Between Farmers Edge and Friendable

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

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

Diversification Opportunities for Farmers Edge and Friendable

0.03

Correlation Coefficient

Farmers Edge  Friendable

Significant diversification

The 3 months correlation between Farmers and Friendable is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Edge and Friendable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friendable and Farmers Edge 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 Farmers Edge are associated (or correlated) with Friendable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friendable has no effect on the direction of Farmers Edge i.e., Farmers Edge and Friendable go up and down completely randomly.

Pair Corralation between Farmers Edge and Friendable

Assuming the 90 days horizon Farmers Edge is expected to under-perform the Friendable. But the pink sheet apears to be less risky and, when comparing its historical volatility, Farmers Edge is 4.24 times less risky than Friendable. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Friendable is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.05  in Friendable on October 5, 2024 and sell it today you would lose (1.04) from holding Friendable or give up 99.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	23.53%
Values	Daily Returns

Farmers Edge  vs.  Friendable

Farmers Edge

Risk-Adjusted Performance

0 of 100

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.

Friendable

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Friendable are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, Friendable disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farmers Edge and Friendable

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

The idea behind Farmers Edge and Friendable 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..