Correlation Between Formetal and CU Medical
Can any of the company-specific risk be diversified away by investing in both Formetal and CU Medical 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 CU Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and CU Medical Systems, you can compare the effects of market volatilities on Formetal and CU Medical 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 CU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and CU Medical.
Diversification Opportunities for Formetal and CU Medical
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formetal and 115480 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and CU Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CU Medical Systems 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 CU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CU Medical Systems has no effect on the direction of Formetal i.e., Formetal and CU Medical go up and down completely randomly.
Pair Corralation between Formetal and CU Medical
Assuming the 90 days trading horizon Formetal Co is expected to generate 2.24 times more return on investment than CU Medical. However, Formetal is 2.24 times more volatile than CU Medical Systems. It trades about 0.11 of its potential returns per unit of risk. CU Medical Systems is currently generating about -0.05 per unit of risk. If you would invest 280,318 in Formetal Co on October 14, 2024 and sell it today you would earn a total of 71,682 from holding Formetal Co or generate 25.57% 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. CU Medical Systems
Performance |
| Timeline |
| Formetal |
| CU Medical Systems |
Formetal and CU Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and CU Medical
The main advantage of trading using opposite Formetal and CU Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, CU Medical 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 CU Medical will offset losses from the drop in CU Medical's long position.| Formetal vs. Dongil Metal Co | Formetal vs. Cheryong Industrial CoLtd | Formetal vs. Industrial Bank | Formetal vs. Hyundai Industrial Co |
| CU Medical vs. PJ Metal Co | CU Medical vs. MetaLabs Co | CU Medical vs. Cube Entertainment | CU Medical vs. Formetal 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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