Correlation Between AOPEN and FIC Global
Can any of the company-specific risk be diversified away by investing in both AOPEN and FIC Global 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 AOPEN and FIC Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOPEN Inc and FIC Global, you can compare the effects of market volatilities on AOPEN and FIC Global 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 AOPEN with a short position of FIC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOPEN and FIC Global.
Diversification Opportunities for AOPEN and FIC Global
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AOPEN and FIC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AOPEN Inc and FIC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIC Global and AOPEN 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 AOPEN Inc are associated (or correlated) with FIC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIC Global has no effect on the direction of AOPEN i.e., AOPEN and FIC Global go up and down completely randomly.
Pair Corralation between AOPEN and FIC Global
Assuming the 90 days trading horizon AOPEN Inc is expected to under-perform the FIC Global. But the stock apears to be less risky and, when comparing its historical volatility, AOPEN Inc is 1.86 times less risky than FIC Global. The stock trades about -0.16 of its potential returns per unit of risk. The FIC Global is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,935 in FIC Global on November 2, 2024 and sell it today you would lose (170.00) from holding FIC Global or give up 4.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AOPEN Inc vs. FIC Global
Performance |
| Timeline |
| AOPEN Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FIC Global |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AOPEN and FIC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOPEN and FIC Global
The main advantage of trading using opposite AOPEN and FIC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOPEN position performs unexpectedly, FIC Global 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 FIC Global will offset losses from the drop in FIC Global's long position.The idea behind AOPEN Inc and FIC Global 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.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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