Correlation Between FLITTO and Formetal
Can any of the company-specific risk be diversified away by investing in both FLITTO 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 FLITTO and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLITTO Inc and Formetal Co, you can compare the effects of market volatilities on FLITTO 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 FLITTO with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLITTO and Formetal.
Diversification Opportunities for FLITTO and Formetal
Average diversification
The 3 months correlation between FLITTO and Formetal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FLITTO Inc and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and FLITTO 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 FLITTO Inc 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 FLITTO i.e., FLITTO and Formetal go up and down completely randomly.
Pair Corralation between FLITTO and Formetal
Assuming the 90 days trading horizon FLITTO Inc is expected to generate 2.29 times more return on investment than Formetal. However, FLITTO is 2.29 times more volatile than Formetal Co. It trades about 0.01 of its potential returns per unit of risk. Formetal Co is currently generating about 0.01 per unit of risk. If you would invest 2,735,000 in FLITTO Inc on September 14, 2024 and sell it today you would lose (749,000) from holding FLITTO Inc or give up 27.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLITTO Inc vs. Formetal Co
Performance |
| Timeline |
| FLITTO Inc |
| Formetal |
FLITTO and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLITTO and Formetal
The main advantage of trading using opposite FLITTO and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLITTO 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.The idea behind FLITTO Inc and Formetal Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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