Correlation Between FIT INVEST and South Basic
Can any of the company-specific risk be diversified away by investing in both FIT INVEST and South Basic 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 FIT INVEST and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIT INVEST JSC and South Basic Chemicals, you can compare the effects of market volatilities on FIT INVEST and South Basic 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 FIT INVEST with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and South Basic.
Diversification Opportunities for FIT INVEST and South Basic
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FIT and South is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and FIT INVEST 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 FIT INVEST JSC are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of FIT INVEST i.e., FIT INVEST and South Basic go up and down completely randomly.
Pair Corralation between FIT INVEST and South Basic
Assuming the 90 days trading horizon FIT INVEST JSC is expected to under-perform the South Basic. But the stock apears to be less risky and, when comparing its historical volatility, FIT INVEST JSC is 2.45 times less risky than South Basic. The stock trades about -0.1 of its potential returns per unit of risk. The South Basic Chemicals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,530,000 in South Basic Chemicals on August 29, 2024 and sell it today you would earn a total of 215,000 from holding South Basic Chemicals or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIT INVEST JSC vs. South Basic Chemicals
Performance |
| Timeline |
| FIT INVEST JSC |
| South Basic Chemicals |
FIT INVEST and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIT INVEST and South Basic
The main advantage of trading using opposite FIT INVEST and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIT INVEST position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| FIT INVEST vs. Damsan JSC | FIT INVEST vs. An Phat Plastic | FIT INVEST vs. APG Securities Joint | FIT INVEST vs. Binhthuan Agriculture Services |
| South Basic vs. FIT INVEST JSC | South Basic vs. Damsan JSC | South Basic vs. An Phat Plastic | South Basic vs. APG Securities Joint |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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