Correlation Between FOM Technologies and BioPorto
Can any of the company-specific risk be diversified away by investing in both FOM Technologies and BioPorto 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 FOM Technologies and BioPorto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOM Technologies AS and BioPorto, you can compare the effects of market volatilities on FOM Technologies and BioPorto 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 FOM Technologies with a short position of BioPorto. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOM Technologies and BioPorto.
Diversification Opportunities for FOM Technologies and BioPorto
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FOM and BioPorto is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and BioPorto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioPorto and FOM Technologies 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 FOM Technologies AS are associated (or correlated) with BioPorto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioPorto has no effect on the direction of FOM Technologies i.e., FOM Technologies and BioPorto go up and down completely randomly.
Pair Corralation between FOM Technologies and BioPorto
Assuming the 90 days trading horizon FOM Technologies AS is expected to under-perform the BioPorto. But the stock apears to be less risky and, when comparing its historical volatility, FOM Technologies AS is 1.21 times less risky than BioPorto. The stock trades about -0.08 of its potential returns per unit of risk. The BioPorto is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 264.00 in BioPorto on August 31, 2024 and sell it today you would lose (109.00) from holding BioPorto or give up 41.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOM Technologies AS vs. BioPorto
Performance |
| Timeline |
| FOM Technologies |
| BioPorto |
FOM Technologies and BioPorto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOM Technologies and BioPorto
The main advantage of trading using opposite FOM Technologies and BioPorto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOM Technologies position performs unexpectedly, BioPorto 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 BioPorto will offset losses from the drop in BioPorto's long position.| FOM Technologies vs. cBrain AS | FOM Technologies vs. Penneo AS | FOM Technologies vs. Shape Robotics AS | FOM Technologies vs. ALK Abell AS |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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