Correlation Between Fenbo Holdings and Wearable Devices
Can any of the company-specific risk be diversified away by investing in both Fenbo Holdings and Wearable Devices 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 Fenbo Holdings and Wearable Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fenbo Holdings Limited and Wearable Devices, you can compare the effects of market volatilities on Fenbo Holdings and Wearable Devices 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 Fenbo Holdings with a short position of Wearable Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fenbo Holdings and Wearable Devices.
Diversification Opportunities for Fenbo Holdings and Wearable Devices
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fenbo and Wearable is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fenbo Holdings Limited and Wearable Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Devices and Fenbo Holdings 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 Fenbo Holdings Limited are associated (or correlated) with Wearable Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Devices has no effect on the direction of Fenbo Holdings i.e., Fenbo Holdings and Wearable Devices go up and down completely randomly.
Pair Corralation between Fenbo Holdings and Wearable Devices
Given the investment horizon of 90 days Fenbo Holdings Limited is expected to under-perform the Wearable Devices. But the stock apears to be less risky and, when comparing its historical volatility, Fenbo Holdings Limited is 1.43 times less risky than Wearable Devices. The stock trades about 0.0 of its potential returns per unit of risk. The Wearable Devices is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,138 in Wearable Devices on November 19, 2024 and sell it today you would lose (1,039) from holding Wearable Devices or give up 91.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.49% |
| Values | Daily Returns |
Fenbo Holdings Limited vs. Wearable Devices
Performance |
| Timeline |
| Fenbo Holdings |
| Wearable Devices |
Fenbo Holdings and Wearable Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fenbo Holdings and Wearable Devices
The main advantage of trading using opposite Fenbo Holdings and Wearable Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fenbo Holdings position performs unexpectedly, Wearable Devices 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 Wearable Devices will offset losses from the drop in Wearable Devices' long position.| Fenbo Holdings vs. Lucid Group | Fenbo Holdings vs. Ryder System | Fenbo Holdings vs. Willscot Mobile Mini | Fenbo Holdings vs. Alta Equipment Group |
| Wearable Devices vs. Koss Corporation | Wearable Devices vs. Wearable Devices | Wearable Devices vs. Sonos Inc | Wearable Devices vs. LG Display Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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