Correlation Between Focus Impact and Fat Projects
Can any of the company-specific risk be diversified away by investing in both Focus Impact and Fat Projects 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 Impact and Fat Projects into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Impact Acquisition and Fat Projects Acquisition, you can compare the effects of market volatilities on Focus Impact and Fat Projects 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 Impact with a short position of Fat Projects. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Impact and Fat Projects.
Diversification Opportunities for Focus Impact and Fat Projects
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Focus and Fat is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Focus Impact Acquisition and Fat Projects Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fat Projects Acquisition and Focus Impact 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 Impact Acquisition are associated (or correlated) with Fat Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fat Projects Acquisition has no effect on the direction of Focus Impact i.e., Focus Impact and Fat Projects go up and down completely randomly.
Pair Corralation between Focus Impact and Fat Projects
Assuming the 90 days horizon Focus Impact Acquisition is expected to generate 6.02 times more return on investment than Fat Projects. However, Focus Impact is 6.02 times more volatile than Fat Projects Acquisition. It trades about 0.12 of its potential returns per unit of risk. Fat Projects Acquisition is currently generating about 0.1 per unit of risk. 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 |
Focus Impact Acquisition vs. Fat Projects Acquisition
Performance |
| Timeline |
| Focus Impact Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Fat Projects Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Focus Impact and Fat Projects Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Impact and Fat Projects
The main advantage of trading using opposite Focus Impact and Fat Projects positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Impact position performs unexpectedly, Fat Projects 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 Fat Projects will offset losses from the drop in Fat Projects' long position.The idea behind Focus Impact Acquisition and Fat Projects 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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