Correlation Between Focus Universal and Flexpoint Sensor
Can any of the company-specific risk be diversified away by investing in both Focus Universal and Flexpoint Sensor 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 Focus Universal and Flexpoint Sensor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Universal and Flexpoint Sensor Systems, you can compare the effects of market volatilities on Focus Universal and Flexpoint Sensor 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 Focus Universal with a short position of Flexpoint Sensor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Universal and Flexpoint Sensor.
Diversification Opportunities for Focus Universal and Flexpoint Sensor
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Focus and Flexpoint is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Focus Universal and Flexpoint Sensor Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexpoint Sensor Systems and Focus Universal 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 Focus Universal are associated (or correlated) with Flexpoint Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexpoint Sensor Systems has no effect on the direction of Focus Universal i.e., Focus Universal and Flexpoint Sensor go up and down completely randomly.
Pair Corralation between Focus Universal and Flexpoint Sensor
Given the investment horizon of 90 days Focus Universal is expected to under-perform the Flexpoint Sensor. But the stock apears to be less risky and, when comparing its historical volatility, Focus Universal is 2.72 times less risky than Flexpoint Sensor. The stock trades about -0.03 of its potential returns per unit of risk. The Flexpoint Sensor Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Flexpoint Sensor Systems on August 28, 2024 and sell it today you would lose (0.01) from holding Flexpoint Sensor Systems or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Universal vs. Flexpoint Sensor Systems
Performance |
| Timeline |
| Focus Universal |
| Flexpoint Sensor Systems |
Focus Universal and Flexpoint Sensor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Universal and Flexpoint Sensor
The main advantage of trading using opposite Focus Universal and Flexpoint Sensor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Universal position performs unexpectedly, Flexpoint Sensor 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 Flexpoint Sensor will offset losses from the drop in Flexpoint Sensor's long position.| Focus Universal vs. ESCO Technologies | Focus Universal vs. Genasys | Focus Universal vs. Cepton Inc | Focus Universal vs. Darkpulse |
| Flexpoint Sensor vs. Electronic Sensor Technology | Flexpoint Sensor vs. 3Dx Industries | Flexpoint Sensor vs. Cavitation Techs |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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