Correlation Between FIT INVEST and PC3 Investment
Can any of the company-specific risk be diversified away by investing in both FIT INVEST and PC3 Investment 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 PC3 Investment 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 PC3 Investment JSC, you can compare the effects of market volatilities on FIT INVEST and PC3 Investment 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 PC3 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and PC3 Investment.
Diversification Opportunities for FIT INVEST and PC3 Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FIT and PC3 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and PC3 Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC3 Investment JSC 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 PC3 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC3 Investment JSC has no effect on the direction of FIT INVEST i.e., FIT INVEST and PC3 Investment go up and down completely randomly.
Pair Corralation between FIT INVEST and PC3 Investment
Assuming the 90 days trading horizon FIT INVEST is expected to generate 10.56 times less return on investment than PC3 Investment. But when comparing it to its historical volatility, FIT INVEST JSC is 1.96 times less risky than PC3 Investment. It trades about 0.01 of its potential returns per unit of risk. PC3 Investment JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,358,878 in PC3 Investment JSC on October 18, 2024 and sell it today you would earn a total of 521,122 from holding PC3 Investment JSC or generate 38.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.9% |
| Values | Daily Returns |
FIT INVEST JSC vs. PC3 Investment JSC
Performance |
| Timeline |
| FIT INVEST JSC |
| PC3 Investment JSC |
FIT INVEST and PC3 Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIT INVEST and PC3 Investment
The main advantage of trading using opposite FIT INVEST and PC3 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIT INVEST position performs unexpectedly, PC3 Investment 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 PC3 Investment will offset losses from the drop in PC3 Investment's long position.| FIT INVEST vs. Agriculture Printing and | FIT INVEST vs. PetroVietnam Transportation Corp | FIT INVEST vs. Ba Ria Thermal | FIT INVEST vs. Mechanics Construction and |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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