Correlation Between VERB TECHNOLOGY and Farmmi

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

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

Diversification Opportunities for VERB TECHNOLOGY and Farmmi

0.26

Correlation Coefficient

VERB TECHNOLOGY  Farmmi

Modest diversification

The 3 months correlation between VERB and Farmmi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding VERB TECHNOLOGY PANY and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and VERB TECHNOLOGY 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 VERB TECHNOLOGY PANY 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 VERB TECHNOLOGY i.e., VERB TECHNOLOGY and Farmmi go up and down completely randomly.

Pair Corralation between VERB TECHNOLOGY and Farmmi

Given the investment horizon of 90 days VERB TECHNOLOGY PANY is expected to generate 3.4 times more return on investment than Farmmi. However, VERB TECHNOLOGY is 3.4 times more volatile than Farmmi Inc. It trades about -0.01 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.05 per unit of risk. If you would invest  133,600  in VERB TECHNOLOGY PANY on September 25, 2024 and sell it today you would lose (132,933) from holding VERB TECHNOLOGY PANY or give up 99.5% of portfolio value over 90 days.

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

VERB TECHNOLOGY PANY  vs.  Farmmi Inc

VERB TECHNOLOGY PANY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VERB TECHNOLOGY PANY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, VERB TECHNOLOGY is not utilizing all of its potentials. The current 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 VERB TECHNOLOGY and Farmmi

The main advantage of trading using opposite VERB TECHNOLOGY and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERB TECHNOLOGY 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 VERB TECHNOLOGY PANY 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.