Correlation Between Farmhouse and Phonex

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

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

Diversification Opportunities for Farmhouse and Phonex

-0.26

Correlation Coefficient

Farmhouse  Phonex

Very good diversification

The 3 months correlation between Farmhouse and Phonex is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Farmhouse and Phonex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phonex Inc and Farmhouse 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 Farmhouse are associated (or correlated) with Phonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phonex Inc has no effect on the direction of Farmhouse i.e., Farmhouse and Phonex go up and down completely randomly.

Pair Corralation between Farmhouse and Phonex

Given the investment horizon of 90 days Farmhouse is expected to generate 4.95 times more return on investment than Phonex. However, Farmhouse is 4.95 times more volatile than Phonex Inc. It trades about 0.06 of its potential returns per unit of risk. Phonex Inc is currently generating about -0.02 per unit of risk. If you would invest  19.00  in Farmhouse on September 22, 2024 and sell it today you would lose (11.50) from holding Farmhouse or give up 60.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Farmhouse  vs.  Phonex Inc

Farmhouse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farmhouse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Phonex Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phonex Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Phonex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Farmhouse and Phonex

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

The idea behind Farmhouse and Phonex 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.