Correlation Between FarmStory and Mobileleader CoLtd

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

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

Diversification Opportunities for FarmStory and Mobileleader CoLtd

0.76

Correlation Coefficient

FarmStory  Mobileleader CoLtd

Poor diversification

The 3 months correlation between FarmStory and Mobileleader is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FarmStory Co and Mobileleader CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileleader CoLtd 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 Mobileleader CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileleader CoLtd has no effect on the direction of FarmStory i.e., FarmStory and Mobileleader CoLtd go up and down completely randomly.

Pair Corralation between FarmStory and Mobileleader CoLtd

Assuming the 90 days trading horizon FarmStory Co is expected to under-perform the Mobileleader CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, FarmStory Co is 1.84 times less risky than Mobileleader CoLtd. The stock trades about -0.3 of its potential returns per unit of risk. The Mobileleader CoLtd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,746,000  in Mobileleader CoLtd on September 1, 2024 and sell it today you would lose (40,000) from holding Mobileleader CoLtd or give up 2.29% of portfolio value over 90 days.

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

FarmStory Co  vs.  Mobileleader CoLtd

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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Mobileleader CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobileleader CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with FarmStory and Mobileleader CoLtd

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

The idea behind FarmStory Co and Mobileleader CoLtd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.