Correlation Between Broedrene and FOM Technologies
Can any of the company-specific risk be diversified away by investing in both Broedrene and FOM Technologies 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 Broedrene and FOM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broedrene AO Johansen and FOM Technologies AS, you can compare the effects of market volatilities on Broedrene and FOM Technologies 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 Broedrene with a short position of FOM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broedrene and FOM Technologies.
Diversification Opportunities for Broedrene and FOM Technologies
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Broedrene and FOM is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Broedrene AO Johansen and FOM Technologies AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOM Technologies and Broedrene 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 Broedrene AO Johansen are associated (or correlated) with FOM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOM Technologies has no effect on the direction of Broedrene i.e., Broedrene and FOM Technologies go up and down completely randomly.
Pair Corralation between Broedrene and FOM Technologies
Assuming the 90 days trading horizon Broedrene AO Johansen is expected to generate 0.4 times more return on investment than FOM Technologies. However, Broedrene AO Johansen is 2.5 times less risky than FOM Technologies. It trades about -0.06 of its potential returns per unit of risk. FOM Technologies AS is currently generating about -0.46 per unit of risk. If you would invest 8,320 in Broedrene AO Johansen on August 29, 2024 and sell it today you would lose (190.00) from holding Broedrene AO Johansen or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broedrene AO Johansen vs. FOM Technologies AS
Performance |
| Timeline |
| Broedrene AO Johansen |
| FOM Technologies |
Broedrene and FOM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broedrene and FOM Technologies
The main advantage of trading using opposite Broedrene and FOM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broedrene position performs unexpectedly, FOM Technologies 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 FOM Technologies will offset losses from the drop in FOM Technologies' long position.| Broedrene vs. North Media AS | Broedrene vs. Solar AS | Broedrene vs. Per Aarsleff Holding | Broedrene vs. HusCompagniet AS |
| FOM Technologies vs. cBrain AS | FOM Technologies vs. Penneo AS | FOM Technologies vs. Shape Robotics AS | FOM Technologies vs. ALK Abell 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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