Correlation Between Fat Projects and Focus Impact
Can any of the company-specific risk be diversified away by investing in both Fat Projects and Focus Impact 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 Fat Projects and Focus Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fat Projects Acquisition and Focus Impact Acquisition, you can compare the effects of market volatilities on Fat Projects and Focus Impact 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 Fat Projects with a short position of Focus Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fat Projects and Focus Impact.
Diversification Opportunities for Fat Projects and Focus Impact
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fat and Focus is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fat Projects Acquisition and Focus Impact Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Impact Acquisition and Fat Projects 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 Fat Projects Acquisition are associated (or correlated) with Focus Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Impact Acquisition has no effect on the direction of Fat Projects i.e., Fat Projects and Focus Impact go up and down completely randomly.
Pair Corralation between Fat Projects and Focus Impact
Assuming the 90 days horizon Fat Projects is expected to generate 6.97 times less return on investment than Focus Impact. But when comparing it to its historical volatility, Fat Projects Acquisition is 6.02 times less risky than Focus Impact. It trades about 0.1 of its potential returns per unit of risk. Focus Impact Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9.97 in Focus Impact Acquisition on August 27, 2024 and sell it today you would lose (8.97) from holding Focus Impact Acquisition or give up 89.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 51.6% |
| Values | Daily Returns |
Fat Projects Acquisition vs. Focus Impact Acquisition
Performance |
| Timeline |
| Fat Projects Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Focus Impact Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Fat Projects and Focus Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fat Projects and Focus Impact
The main advantage of trading using opposite Fat Projects and Focus Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fat Projects position performs unexpectedly, Focus Impact 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 Impact will offset losses from the drop in Focus Impact's long position.The idea behind Fat Projects Acquisition and Focus Impact Acquisition 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |