Correlation Between Forbo Holding and Feintool International
Can any of the company-specific risk be diversified away by investing in both Forbo Holding and Feintool International 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 Forbo Holding and Feintool International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forbo Holding AG and Feintool International Holding, you can compare the effects of market volatilities on Forbo Holding and Feintool International 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 Forbo Holding with a short position of Feintool International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forbo Holding and Feintool International.
Diversification Opportunities for Forbo Holding and Feintool International
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forbo and Feintool is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Forbo Holding AG and Feintool International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feintool International and Forbo Holding 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 Forbo Holding AG are associated (or correlated) with Feintool International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feintool International has no effect on the direction of Forbo Holding i.e., Forbo Holding and Feintool International go up and down completely randomly.
Pair Corralation between Forbo Holding and Feintool International
Assuming the 90 days trading horizon Forbo Holding AG is expected to under-perform the Feintool International. But the stock apears to be less risky and, when comparing its historical volatility, Forbo Holding AG is 1.29 times less risky than Feintool International. The stock trades about -0.09 of its potential returns per unit of risk. The Feintool International Holding is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,303 in Feintool International Holding on August 31, 2024 and sell it today you would lose (748.00) from holding Feintool International Holding or give up 32.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Forbo Holding AG vs. Feintool International Holding
Performance |
| Timeline |
| Forbo Holding AG |
| Feintool International |
Forbo Holding and Feintool International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forbo Holding and Feintool International
The main advantage of trading using opposite Forbo Holding and Feintool International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forbo Holding position performs unexpectedly, Feintool International 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 Feintool International will offset losses from the drop in Feintool International's long position.| Forbo Holding vs. Givaudan SA | Forbo Holding vs. Sika AG | Forbo Holding vs. Lonza Group AG | Forbo Holding vs. SGS SA |
| Feintool International vs. Rieter Holding AG | Feintool International vs. Autoneum Holding AG | Feintool International vs. Bucher Industries AG | Feintool International vs. Komax Holding AG |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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