Correlation Between Formetal and Camus Engineering
Can any of the company-specific risk be diversified away by investing in both Formetal and Camus Engineering 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 Formetal and Camus Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Camus Engineering Construction, you can compare the effects of market volatilities on Formetal and Camus Engineering 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 Formetal with a short position of Camus Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Camus Engineering.
Diversification Opportunities for Formetal and Camus Engineering
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formetal and Camus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Camus Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camus Engineering and Formetal 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 Formetal Co are associated (or correlated) with Camus Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camus Engineering has no effect on the direction of Formetal i.e., Formetal and Camus Engineering go up and down completely randomly.
Pair Corralation between Formetal and Camus Engineering
Assuming the 90 days trading horizon Formetal Co is expected to generate 1.11 times more return on investment than Camus Engineering. However, Formetal is 1.11 times more volatile than Camus Engineering Construction. It trades about 0.02 of its potential returns per unit of risk. Camus Engineering Construction is currently generating about -0.02 per unit of risk. If you would invest 363,477 in Formetal Co on October 30, 2024 and sell it today you would earn a total of 17,023 from holding Formetal Co or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Camus Engineering Construction
Performance |
| Timeline |
| Formetal |
| Camus Engineering |
Formetal and Camus Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Camus Engineering
The main advantage of trading using opposite Formetal and Camus Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Camus Engineering 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 Camus Engineering will offset losses from the drop in Camus Engineering's long position.| Formetal vs. Shinhan Financial Group | Formetal vs. Golden Bridge Investment | Formetal vs. Jeju Bank | Formetal vs. DB Financial Investment |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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