Correlation Between FSA and Acrow
Can any of the company-specific risk be diversified away by investing in both FSA and Acrow 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 FSA and Acrow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and Acrow Limited, you can compare the effects of market volatilities on FSA and Acrow 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 FSA with a short position of Acrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and Acrow.
Diversification Opportunities for FSA and Acrow
Good diversification
The 3 months correlation between FSA and Acrow is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Acrow Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrow Limited and FSA 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 FSA Group are associated (or correlated) with Acrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrow Limited has no effect on the direction of FSA i.e., FSA and Acrow go up and down completely randomly.
Pair Corralation between FSA and Acrow
Assuming the 90 days trading horizon FSA is expected to generate 54.9 times less return on investment than Acrow. But when comparing it to its historical volatility, FSA Group is 1.83 times less risky than Acrow. It trades about 0.0 of its potential returns per unit of risk. Acrow Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 104.00 in Acrow Limited on October 7, 2024 and sell it today you would earn a total of 5.00 from holding Acrow Limited or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FSA Group vs. Acrow Limited
Performance |
| Timeline |
| FSA Group |
| Acrow Limited |
FSA and Acrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and Acrow
The main advantage of trading using opposite FSA and Acrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA position performs unexpectedly, Acrow 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 Acrow will offset losses from the drop in Acrow's long position.| FSA vs. Vulcan Steel | FSA vs. Maggie Beer Holdings | FSA vs. Epsilon Healthcare | FSA vs. MotorCycle Holdings |
| Acrow vs. Vulcan Steel | Acrow vs. Ironbark Capital | Acrow vs. Alternative Investment Trust | Acrow vs. Mount Gibson Iron |
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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