Correlation Between FONIX MOBILE and BROADWIND ENRGY

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Can any of the company-specific risk be diversified away by investing in both FONIX MOBILE and BROADWIND ENRGY 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 FONIX MOBILE and BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FONIX MOBILE PLC and BROADWIND ENRGY, you can compare the effects of market volatilities on FONIX MOBILE and BROADWIND ENRGY 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 FONIX MOBILE with a short position of BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of FONIX MOBILE and BROADWIND ENRGY.

Diversification Opportunities for FONIX MOBILE and BROADWIND ENRGY

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between FONIX and BROADWIND is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FONIX MOBILE PLC and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and FONIX MOBILE 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 FONIX MOBILE PLC are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of FONIX MOBILE i.e., FONIX MOBILE and BROADWIND ENRGY go up and down completely randomly.

Pair Corralation between FONIX MOBILE and BROADWIND ENRGY

Assuming the 90 days horizon FONIX MOBILE is expected to generate 6.73 times less return on investment than BROADWIND ENRGY. But when comparing it to its historical volatility, FONIX MOBILE PLC is 1.97 times less risky than BROADWIND ENRGY. It trades about 0.06 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  168.00  in BROADWIND ENRGY on October 11, 2024 and sell it today you would earn a total of  20.00  from holding BROADWIND ENRGY or generate 11.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FONIX MOBILE PLC  vs.  BROADWIND ENRGY

 Performance 
       Timeline  
FONIX MOBILE PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FONIX MOBILE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FONIX MOBILE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
BROADWIND ENRGY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BROADWIND ENRGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BROADWIND ENRGY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FONIX MOBILE and BROADWIND ENRGY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FONIX MOBILE and BROADWIND ENRGY

The main advantage of trading using opposite FONIX MOBILE and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FONIX MOBILE position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.
The idea behind FONIX MOBILE PLC and BROADWIND ENRGY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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