Correlation Between Fine Metal and Communication System
Can any of the company-specific risk be diversified away by investing in both Fine Metal and Communication System 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 Fine Metal and Communication System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fine Metal Technologies and Communication System Solution, you can compare the effects of market volatilities on Fine Metal and Communication System 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 Fine Metal with a short position of Communication System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Metal and Communication System.
Diversification Opportunities for Fine Metal and Communication System
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fine and Communication is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fine Metal Technologies and Communication System Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication System and Fine Metal 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 Fine Metal Technologies are associated (or correlated) with Communication System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication System has no effect on the direction of Fine Metal i.e., Fine Metal and Communication System go up and down completely randomly.
Pair Corralation between Fine Metal and Communication System
Assuming the 90 days trading horizon Fine Metal Technologies is expected to generate 1.0 times more return on investment than Communication System. However, Fine Metal Technologies is 1.0 times less risky than Communication System. It trades about 0.04 of its potential returns per unit of risk. Communication System Solution is currently generating about 0.04 per unit of risk. If you would invest 2,664 in Fine Metal Technologies on September 13, 2024 and sell it today you would earn a total of 586.00 from holding Fine Metal Technologies or generate 22.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Metal Technologies vs. Communication System Solution
Performance |
| Timeline |
| Fine Metal Technologies |
| Communication System |
Fine Metal and Communication System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Metal and Communication System
The main advantage of trading using opposite Fine Metal and Communication System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Metal position performs unexpectedly, Communication System 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 Communication System will offset losses from the drop in Communication System's long position.| Fine Metal vs. Tata Steel Public | Fine Metal vs. TTCL Public | Fine Metal vs. Thaifoods Group Public | Fine Metal vs. TMT Steel Public |
| Communication System vs. Tata Steel Public | Communication System vs. TTCL Public | Communication System vs. Thaifoods Group Public | Communication System vs. TMT Steel Public |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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