Correlation Between Flexible Solutions and New Horizon
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and New Horizon 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 Flexible Solutions and New Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and New Horizon Aircraft, you can compare the effects of market volatilities on Flexible Solutions and New Horizon 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 Flexible Solutions with a short position of New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and New Horizon.
Diversification Opportunities for Flexible Solutions and New Horizon
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Flexible and New is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and New Horizon go up and down completely randomly.
Pair Corralation between Flexible Solutions and New Horizon
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 0.37 times more return on investment than New Horizon. However, Flexible Solutions International is 2.72 times less risky than New Horizon. It trades about 0.04 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about -0.03 per unit of risk. If you would invest 281.00 in Flexible Solutions International on September 14, 2024 and sell it today you would earn a total of 110.00 from holding Flexible Solutions International or generate 39.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.46% |
| Values | Daily Returns |
Flexible Solutions Internation vs. New Horizon Aircraft
Performance |
| Timeline |
| Flexible Solutions |
| New Horizon Aircraft |
Flexible Solutions and New Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and New Horizon
The main advantage of trading using opposite Flexible Solutions and New Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, New Horizon 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 New Horizon will offset losses from the drop in New Horizon's long position.| Flexible Solutions vs. LyondellBasell Industries NV | Flexible Solutions vs. Cabot | Flexible Solutions vs. Westlake Chemical | Flexible Solutions vs. Air Products and |
| New Horizon vs. Consol Energy | New Horizon vs. Reservoir Media | New Horizon vs. Apogee Enterprises | New Horizon vs. Flexible Solutions International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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