Correlation Between Development Investment and FPT Securities
Can any of the company-specific risk be diversified away by investing in both Development Investment and FPT Securities 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 Development Investment and FPT Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Development Investment Construction and FPT Securities JSC, you can compare the effects of market volatilities on Development Investment and FPT Securities 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 Development Investment with a short position of FPT Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Development Investment and FPT Securities.
Diversification Opportunities for Development Investment and FPT Securities
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Development and FPT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Development Investment Constru and FPT Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Securities JSC and Development Investment 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 Development Investment Construction are associated (or correlated) with FPT Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Securities JSC has no effect on the direction of Development Investment i.e., Development Investment and FPT Securities go up and down completely randomly.
Pair Corralation between Development Investment and FPT Securities
Assuming the 90 days trading horizon Development Investment Construction is expected to under-perform the FPT Securities. In addition to that, Development Investment is 1.06 times more volatile than FPT Securities JSC. It trades about -0.04 of its total potential returns per unit of risk. FPT Securities JSC is currently generating about 0.08 per unit of volatility. If you would invest 3,017,644 in FPT Securities JSC on September 2, 2024 and sell it today you would earn a total of 1,442,356 from holding FPT Securities JSC or generate 47.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.06% |
| Values | Daily Returns |
Development Investment Constru vs. FPT Securities JSC
Performance |
| Timeline |
| Development Investment |
| FPT Securities JSC |
Development Investment and FPT Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Development Investment and FPT Securities
The main advantage of trading using opposite Development Investment and FPT Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development Investment position performs unexpectedly, FPT Securities 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 FPT Securities will offset losses from the drop in FPT Securities' long position.The idea behind Development Investment Construction and FPT Securities JSC 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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