Correlation Between Farmers Edge and Kinaxis

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

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

Diversification Opportunities for Farmers Edge and Kinaxis

-0.12

Correlation Coefficient

Farmers Edge  Kinaxis

Good diversification

The 3 months correlation between Farmers and Kinaxis is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Edge and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of Farmers Edge i.e., Farmers Edge and Kinaxis go up and down completely randomly.

Pair Corralation between Farmers Edge and Kinaxis

Assuming the 90 days horizon Farmers Edge is expected to under-perform the Kinaxis. In addition to that, Farmers Edge is 1.49 times more volatile than Kinaxis. It trades about -0.05 of its total potential returns per unit of risk. Kinaxis is currently generating about 0.02 per unit of volatility. If you would invest  11,020  in Kinaxis on October 11, 2024 and sell it today you would earn a total of  680.00  from holding Kinaxis or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.81%
Values	Daily Returns

Farmers Edge  vs.  Kinaxis

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.

Kinaxis

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinaxis are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Kinaxis is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Farmers Edge and Kinaxis

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

The idea behind Farmers Edge and Kinaxis 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.