Correlation Between Formetal and Adaptive Plasma
Can any of the company-specific risk be diversified away by investing in both Formetal and Adaptive Plasma 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 Adaptive Plasma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Adaptive Plasma Technology, you can compare the effects of market volatilities on Formetal and Adaptive Plasma 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 Adaptive Plasma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Adaptive Plasma.
Diversification Opportunities for Formetal and Adaptive Plasma
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formetal and Adaptive is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Adaptive Plasma Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Plasma Tech 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 Adaptive Plasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Plasma Tech has no effect on the direction of Formetal i.e., Formetal and Adaptive Plasma go up and down completely randomly.
Pair Corralation between Formetal and Adaptive Plasma
Assuming the 90 days trading horizon Formetal Co is expected to generate 1.14 times more return on investment than Adaptive Plasma. However, Formetal is 1.14 times more volatile than Adaptive Plasma Technology. It trades about 0.23 of its potential returns per unit of risk. Adaptive Plasma Technology is currently generating about -0.09 per unit of risk. If you would invest 267,500 in Formetal Co on September 14, 2024 and sell it today you would earn a total of 71,000 from holding Formetal Co or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Adaptive Plasma Technology
Performance |
| Timeline |
| Formetal |
| Adaptive Plasma Tech |
Formetal and Adaptive Plasma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Adaptive Plasma
The main advantage of trading using opposite Formetal and Adaptive Plasma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Adaptive Plasma 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 Adaptive Plasma will offset losses from the drop in Adaptive Plasma's long position.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
| Adaptive Plasma vs. SK Hynix | Adaptive Plasma vs. People Technology | Adaptive Plasma vs. Hana Materials | Adaptive Plasma vs. SIMMTECH Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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