Correlation Between Where Food and Fastbase

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

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

Diversification Opportunities for Where Food and Fastbase

-0.36

Correlation Coefficient

Where Food  Fastbase

Very good diversification

The 3 months correlation between Where and Fastbase is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and Fastbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastbase and Where Food 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 Where Food Comes are associated (or correlated) with Fastbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastbase has no effect on the direction of Where Food i.e., Where Food and Fastbase go up and down completely randomly.

Pair Corralation between Where Food and Fastbase

Given the investment horizon of 90 days Where Food is expected to generate 2.05 times less return on investment than Fastbase. But when comparing it to its historical volatility, Where Food Comes is 3.97 times less risky than Fastbase. It trades about 0.04 of its potential returns per unit of risk. Fastbase is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Fastbase on October 12, 2024 and sell it today you would lose (20.00) from holding Fastbase or give up 13.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Where Food Comes  vs.  Fastbase

Where Food Comes

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Where Food reported solid returns over the last few months and may actually be approaching a breakup point.

Fastbase

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fastbase are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fastbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Where Food and Fastbase

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

The idea behind Where Food Comes and Fastbase 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.