Correlation Between Formetal and COWINTECH
Can any of the company-specific risk be diversified away by investing in both Formetal and COWINTECH 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 COWINTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and COWINTECH Co, you can compare the effects of market volatilities on Formetal and COWINTECH 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 COWINTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and COWINTECH.
Diversification Opportunities for Formetal and COWINTECH
Very weak diversification
The 3 months correlation between Formetal and COWINTECH is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and COWINTECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COWINTECH 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 COWINTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COWINTECH has no effect on the direction of Formetal i.e., Formetal and COWINTECH go up and down completely randomly.
Pair Corralation between Formetal and COWINTECH
Assuming the 90 days trading horizon Formetal Co is expected to generate 0.65 times more return on investment than COWINTECH. However, Formetal Co is 1.55 times less risky than COWINTECH. It trades about -0.02 of its potential returns per unit of risk. COWINTECH Co is currently generating about -0.02 per unit of risk. If you would invest 363,127 in Formetal Co on September 3, 2024 and sell it today you would lose (101,627) from holding Formetal Co or give up 27.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. COWINTECH Co
Performance |
| Timeline |
| Formetal |
| COWINTECH |
Formetal and COWINTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and COWINTECH
The main advantage of trading using opposite Formetal and COWINTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, COWINTECH 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 COWINTECH will offset losses from the drop in COWINTECH's long position.| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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