Correlation Between FarmStory and AhnLab

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

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

Diversification Opportunities for FarmStory and AhnLab

-0.79

Correlation Coefficient

FarmStory  AhnLab

Pay attention - limited upside

The 3 months correlation between FarmStory and AhnLab is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and AhnLab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AhnLab Inc and FarmStory 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 FarmStory Co are associated (or correlated) with AhnLab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AhnLab Inc has no effect on the direction of FarmStory i.e., FarmStory and AhnLab go up and down completely randomly.

Pair Corralation between FarmStory and AhnLab

Assuming the 90 days trading horizon FarmStory Co is expected to under-perform the AhnLab. In addition to that, FarmStory is 1.02 times more volatile than AhnLab Inc. It trades about -0.03 of its total potential returns per unit of risk. AhnLab Inc is currently generating about 0.01 per unit of volatility. If you would invest  6,494,877  in AhnLab Inc on September 4, 2024 and sell it today you would lose (374,877) from holding AhnLab Inc or give up 5.77% of portfolio value over 90 days.

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

FarmStory Co  vs.  AhnLab Inc

FarmStory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FarmStory Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AhnLab Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AhnLab Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AhnLab sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FarmStory and AhnLab

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

The idea behind FarmStory Co and AhnLab 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.