Correlation Between J J and Farmmi

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Can any of the company-specific risk be diversified away by investing in both J J 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 J J and Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J J Snack and Farmmi Inc, you can compare the effects of market volatilities on J J 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 J J with a short position of Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of J J and Farmmi.

Diversification Opportunities for J J and Farmmi

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between JJSF and Farmmi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc and J J 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 J J Snack 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 J J i.e., J J and Farmmi go up and down completely randomly.

Pair Corralation between J J and Farmmi

Given the investment horizon of 90 days J J Snack is expected to generate 0.31 times more return on investment than Farmmi. However, J J Snack is 3.21 times less risky than Farmmi. It trades about 0.03 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.07 per unit of risk. If you would invest  12,738  in J J Snack on December 29, 2023 and sell it today you would earn a total of  1,616  from holding J J Snack or generate 12.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

J J Snack  vs.  Farmmi Inc

 Performance 
       Timeline  
J J Snack 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days J J Snack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Farmmi Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Farmmi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

J J and Farmmi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with J J and Farmmi

The main advantage of trading using opposite J J and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J 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 J J Snack 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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