Correlation Between EV Advanced and Formetal
Can any of the company-specific risk be diversified away by investing in both EV Advanced and Formetal 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 EV Advanced and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EV Advanced Material and Formetal Co, you can compare the effects of market volatilities on EV Advanced and Formetal 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 EV Advanced with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EV Advanced and Formetal.
Diversification Opportunities for EV Advanced and Formetal
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 131400 and Formetal is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding EV Advanced Material and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and EV Advanced 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 EV Advanced Material are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of EV Advanced i.e., EV Advanced and Formetal go up and down completely randomly.
Pair Corralation between EV Advanced and Formetal
Assuming the 90 days trading horizon EV Advanced is expected to generate 12.76 times less return on investment than Formetal. But when comparing it to its historical volatility, EV Advanced Material is 2.29 times less risky than Formetal. It trades about 0.06 of its potential returns per unit of risk. Formetal Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 300,000 in Formetal Co on October 30, 2024 and sell it today you would earn a total of 80,500 from holding Formetal Co or generate 26.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EV Advanced Material vs. Formetal Co
Performance |
| Timeline |
| EV Advanced Material |
| Formetal |
EV Advanced and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EV Advanced and Formetal
The main advantage of trading using opposite EV Advanced and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EV Advanced position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| EV Advanced vs. Wonil Special Steel | EV Advanced vs. Korea Steel Co | EV Advanced vs. CKH Food Health | EV Advanced vs. INFINITT Healthcare Co |
| Formetal vs. Shinhan Financial Group | Formetal vs. Golden Bridge Investment | Formetal vs. Jeju Bank | Formetal vs. DB Financial Investment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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