Correlation Between Ferrexpo PLC and Friedman Industries
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC and Friedman Industries 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 Ferrexpo PLC and Friedman Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Friedman Industries, you can compare the effects of market volatilities on Ferrexpo PLC and Friedman Industries 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 Ferrexpo PLC with a short position of Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Friedman Industries.
Diversification Opportunities for Ferrexpo PLC and Friedman Industries
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ferrexpo and Friedman is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Friedman Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friedman Industries and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Friedman Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friedman Industries has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Friedman Industries go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Friedman Industries
Assuming the 90 days horizon Ferrexpo PLC is expected to under-perform the Friedman Industries. In addition to that, Ferrexpo PLC is 1.36 times more volatile than Friedman Industries. It trades about 0.0 of its total potential returns per unit of risk. Friedman Industries is currently generating about 0.04 per unit of volatility. If you would invest 896.00 in Friedman Industries on August 24, 2024 and sell it today you would earn a total of 460.00 from holding Friedman Industries or generate 51.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ferrexpo PLC vs. Friedman Industries
Performance |
| Timeline |
| Ferrexpo PLC |
| Friedman Industries |
Ferrexpo PLC and Friedman Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Friedman Industries
The main advantage of trading using opposite Ferrexpo PLC and Friedman Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC position performs unexpectedly, Friedman Industries 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 Friedman Industries will offset losses from the drop in Friedman Industries' long position.| Ferrexpo PLC vs. Acerinox SA ADR | Ferrexpo PLC vs. Aperam PK | Ferrexpo PLC vs. Algoma Steel Group | Ferrexpo PLC vs. BlueScope Steel Ltd |
| Friedman Industries vs. Aperam PK | Friedman Industries vs. Acerinox SA ADR | Friedman Industries vs. Algoma Steel Group | Friedman Industries vs. Ferrexpo PLC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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