Correlation Between Formetal and PH Tech
Can any of the company-specific risk be diversified away by investing in both Formetal and PH Tech 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 PH Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and PH Tech Co, you can compare the effects of market volatilities on Formetal and PH Tech 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 PH Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and PH Tech.
Diversification Opportunities for Formetal and PH Tech
Good diversification
The 3 months correlation between Formetal and 239890 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and PH Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PH 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 PH Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PH Tech has no effect on the direction of Formetal i.e., Formetal and PH Tech go up and down completely randomly.
Pair Corralation between Formetal and PH Tech
Assuming the 90 days trading horizon Formetal Co is expected to generate 0.73 times more return on investment than PH Tech. However, Formetal Co is 1.36 times less risky than PH Tech. It trades about -0.01 of its potential returns per unit of risk. PH Tech Co is currently generating about -0.13 per unit of risk. If you would invest 320,500 in Formetal Co on September 21, 2024 and sell it today you would lose (24,000) from holding Formetal Co or give up 7.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. PH Tech Co
Performance |
| Timeline |
| Formetal |
| PH Tech |
Formetal and PH Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and PH Tech
The main advantage of trading using opposite Formetal and PH Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, PH Tech 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 PH Tech will offset losses from the drop in PH Tech's long position.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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