Correlation Between Amsterdam Commodities and ForFarmers

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

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

Diversification Opportunities for Amsterdam Commodities and ForFarmers

0.2

Correlation Coefficient

Amsterdam Commodities  ForFarmers

Modest diversification

The 3 months correlation between Amsterdam and ForFarmers is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amsterdam Commodities NV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and Amsterdam Commodities 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 Amsterdam Commodities NV are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of Amsterdam Commodities i.e., Amsterdam Commodities and ForFarmers go up and down completely randomly.

Pair Corralation between Amsterdam Commodities and ForFarmers

Assuming the 90 days trading horizon Amsterdam Commodities NV is expected to generate 1.04 times more return on investment than ForFarmers. However, Amsterdam Commodities is 1.04 times more volatile than ForFarmers NV. It trades about 0.11 of its potential returns per unit of risk. ForFarmers NV is currently generating about -0.03 per unit of risk. If you would invest  2,030  in Amsterdam Commodities NV on April 22, 2025 and sell it today you would earn a total of  200.00  from holding Amsterdam Commodities NV or generate 9.85% return on investment over 90 days.

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

Amsterdam Commodities NV  vs.  ForFarmers NV

Amsterdam Commodities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amsterdam Commodities NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Amsterdam Commodities may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ForFarmers NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days ForFarmers NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ForFarmers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amsterdam Commodities and ForFarmers

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

The idea behind Amsterdam Commodities NV and ForFarmers NV 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.