Correlation Between FocalTech Systems and Century Wind
Can any of the company-specific risk be diversified away by investing in both FocalTech Systems and Century Wind 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 FocalTech Systems and Century Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FocalTech Systems Co and Century Wind Power, you can compare the effects of market volatilities on FocalTech Systems and Century Wind 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 FocalTech Systems with a short position of Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of FocalTech Systems and Century Wind.
Diversification Opportunities for FocalTech Systems and Century Wind
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FocalTech and Century is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power and FocalTech Systems 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 FocalTech Systems Co are associated (or correlated) with Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and Century Wind go up and down completely randomly.
Pair Corralation between FocalTech Systems and Century Wind
Assuming the 90 days trading horizon FocalTech Systems is expected to generate 2.7 times less return on investment than Century Wind. But when comparing it to its historical volatility, FocalTech Systems Co is 1.1 times less risky than Century Wind. It trades about 0.04 of its potential returns per unit of risk. Century Wind Power is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9,831 in Century Wind Power on September 2, 2024 and sell it today you would earn a total of 20,069 from holding Century Wind Power or generate 204.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
FocalTech Systems Co vs. Century Wind Power
Performance |
| Timeline |
| FocalTech Systems |
| Century Wind Power |
FocalTech Systems and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FocalTech Systems and Century Wind
The main advantage of trading using opposite FocalTech Systems and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FocalTech Systems position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind's long position.The idea behind FocalTech Systems Co and Century Wind Power 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.| Century Wind vs. Ruentex Development Co | Century Wind vs. United Integrated Services | Century Wind vs. CTCI Corp | Century Wind vs. Continental Holdings Corp |
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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