Correlation Between Algorand and Focus Home
Can any of the company-specific risk be diversified away by investing in both Algorand and Focus Home 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 Algorand and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algorand and Focus Home Interactive, you can compare the effects of market volatilities on Algorand and Focus Home 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 Algorand with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and Focus Home.
Diversification Opportunities for Algorand and Focus Home
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algorand and Focus is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and Algorand 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 Algorand are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Algorand i.e., Algorand and Focus Home go up and down completely randomly.
Pair Corralation between Algorand and Focus Home
Assuming the 90 days trading horizon Algorand is expected to generate 1.97 times more return on investment than Focus Home. However, Algorand is 1.97 times more volatile than Focus Home Interactive. It trades about 0.22 of its potential returns per unit of risk. Focus Home Interactive is currently generating about 0.17 per unit of risk. If you would invest 33.00 in Algorand on October 19, 2024 and sell it today you would earn a total of 13.00 from holding Algorand or generate 39.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.27% |
| Values | Daily Returns |
Algorand vs. Focus Home Interactive
Performance |
| Timeline |
| Algorand |
| Focus Home Interactive |
Algorand and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algorand and Focus Home
The main advantage of trading using opposite Algorand and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.The idea behind Algorand and Focus Home Interactive 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.| Focus Home vs. Corporate Office Properties | Focus Home vs. Wayside Technology Group | Focus Home vs. BW OFFSHORE LTD | Focus Home vs. NorAm Drilling AS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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