Correlation Between Formula Systems and Airsculpt Technologies
Can any of the company-specific risk be diversified away by investing in both Formula Systems and Airsculpt Technologies 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 Formula Systems and Airsculpt Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formula Systems 1985 and Airsculpt Technologies, you can compare the effects of market volatilities on Formula Systems and Airsculpt Technologies 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 Formula Systems with a short position of Airsculpt Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula Systems and Airsculpt Technologies.
Diversification Opportunities for Formula Systems and Airsculpt Technologies
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formula and Airsculpt is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Formula Systems 1985 and Airsculpt Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airsculpt Technologies and Formula Systems 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 Formula Systems 1985 are associated (or correlated) with Airsculpt Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airsculpt Technologies has no effect on the direction of Formula Systems i.e., Formula Systems and Airsculpt Technologies go up and down completely randomly.
Pair Corralation between Formula Systems and Airsculpt Technologies
Assuming the 90 days horizon Formula Systems 1985 is expected to under-perform the Airsculpt Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Formula Systems 1985 is 2.43 times less risky than Airsculpt Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Airsculpt Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 588.00 in Airsculpt Technologies on August 31, 2024 and sell it today you would earn a total of 76.00 from holding Airsculpt Technologies or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formula Systems 1985 vs. Airsculpt Technologies
Performance |
| Timeline |
| Formula Systems 1985 |
| Airsculpt Technologies |
Formula Systems and Airsculpt Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formula Systems and Airsculpt Technologies
The main advantage of trading using opposite Formula Systems and Airsculpt Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formula Systems position performs unexpectedly, Airsculpt Technologies 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 Airsculpt Technologies will offset losses from the drop in Airsculpt Technologies' long position.| Formula Systems vs. CSP Inc | Formula Systems vs. Nayax | Formula Systems vs. Information Services Group | Formula Systems vs. The Hackett Group |
| Airsculpt Technologies vs. Acadia Healthcare | Airsculpt Technologies vs. Select Medical Holdings | Airsculpt Technologies vs. Universal Health Services | Airsculpt Technologies vs. Prestige Brand Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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