Correlation Between Sonim Technologies and Farmmi

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

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

Diversification Opportunities for Sonim Technologies and Farmmi

0.78

Correlation Coefficient

Sonim Technologies  Farmmi

Poor diversification

The 3 months correlation between Sonim and Farmmi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sonim Technologies and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and Sonim Technologies 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 Sonim Technologies 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 Sonim Technologies i.e., Sonim Technologies and Farmmi go up and down completely randomly.

Pair Corralation between Sonim Technologies and Farmmi

Given the investment horizon of 90 days Sonim Technologies is expected to generate 0.94 times more return on investment than Farmmi. However, Sonim Technologies is 1.07 times less risky than Farmmi. It trades about 0.02 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.05 per unit of risk. If you would invest  456.00  in Sonim Technologies on September 12, 2024 and sell it today you would lose (127.00) from holding Sonim Technologies or give up 27.85% of portfolio value over 90 days.

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

Sonim Technologies  vs.  Farmmi Inc

Sonim Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonim Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Sonim Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Farmmi Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Farmmi Inc are ranked lower than 8 (%) 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 Sonim Technologies and Farmmi

The main advantage of trading using opposite Sonim Technologies and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonim Technologies 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 Sonim Technologies 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.