Correlation Between FormPipe Software and CAG Group
Can any of the company-specific risk be diversified away by investing in both FormPipe Software and CAG Group 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 FormPipe Software and CAG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FormPipe Software AB and CAG Group AB, you can compare the effects of market volatilities on FormPipe Software and CAG Group 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 FormPipe Software with a short position of CAG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormPipe Software and CAG Group.
Diversification Opportunities for FormPipe Software and CAG Group
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FormPipe and CAG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and CAG Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAG Group AB and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with CAG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAG Group AB has no effect on the direction of FormPipe Software i.e., FormPipe Software and CAG Group go up and down completely randomly.
Pair Corralation between FormPipe Software and CAG Group
Assuming the 90 days trading horizon FormPipe Software AB is expected to under-perform the CAG Group. In addition to that, FormPipe Software is 1.36 times more volatile than CAG Group AB. It trades about -0.1 of its total potential returns per unit of risk. CAG Group AB is currently generating about 0.02 per unit of volatility. If you would invest 11,050 in CAG Group AB on August 28, 2024 and sell it today you would earn a total of 50.00 from holding CAG Group AB or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FormPipe Software AB vs. CAG Group AB
Performance |
| Timeline |
| FormPipe Software |
| CAG Group AB |
FormPipe Software and CAG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FormPipe Software and CAG Group
The main advantage of trading using opposite FormPipe Software and CAG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormPipe Software position performs unexpectedly, CAG Group 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 CAG Group will offset losses from the drop in CAG Group's long position.| FormPipe Software vs. Enea AB | FormPipe Software vs. Novotek AB | FormPipe Software vs. Addnode Group AB | FormPipe Software vs. Softronic AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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