Correlation Between Meten Edtechx and Farmmi

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

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

Diversification Opportunities for Meten Edtechx and Farmmi

-0.42

Correlation Coefficient

Meten Edtechx  Farmmi

Very good diversification

The 3 months correlation between Meten and Farmmi is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Meten Edtechx Education and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and Meten Edtechx 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 Meten Edtechx Education are associated (or correlated) with Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Meten Edtechx i.e., Meten Edtechx and Farmmi go up and down completely randomly.

Pair Corralation between Meten Edtechx and Farmmi

If you would invest  27.00  in Farmmi Inc on September 25, 2024 and sell it today you would earn a total of  1.81  from holding Farmmi Inc or generate 6.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Meten Edtechx Education  vs.  Farmmi Inc

Meten Edtechx Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meten Edtechx Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Meten Edtechx is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Farmmi Inc

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Farmmi Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile primary indicators, Farmmi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meten Edtechx and Farmmi

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

The idea behind Meten Edtechx Education and Farmmi Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.