Correlation Between Farmers Edge and Liveworld

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

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

Diversification Opportunities for Farmers Edge and Liveworld

0.28

Correlation Coefficient

Farmers Edge  Liveworld

Modest diversification

The 3 months correlation between Farmers and Liveworld is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Edge and Liveworld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liveworld 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 Liveworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liveworld has no effect on the direction of Farmers Edge i.e., Farmers Edge and Liveworld go up and down completely randomly.

Pair Corralation between Farmers Edge and Liveworld

If you would invest  23.00  in Liveworld on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Liveworld or generate 0.0% return on investment over 90 days.

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

Farmers Edge  vs.  Liveworld

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.

Liveworld

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liveworld has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Liveworld is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Farmers Edge and Liveworld

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

The idea behind Farmers Edge and Liveworld 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.