Correlation Between Forth Smart and Micro Leasing

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

Diversification Opportunities for Forth Smart and Micro Leasing

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Forth and Micro is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Forth Smart Service and Micro Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Leasing Public and Forth Smart 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 Forth Smart Service are associated (or correlated) with Micro Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Leasing Public has no effect on the direction of Forth Smart i.e., Forth Smart and Micro Leasing go up and down completely randomly.

Pair Corralation between Forth Smart and Micro Leasing

Assuming the 90 days trading horizon Forth Smart Service is expected to generate 2.06 times more return on investment than Micro Leasing. However, Forth Smart is 2.06 times more volatile than Micro Leasing Public. It trades about 0.18 of its potential returns per unit of risk. Micro Leasing Public is currently generating about -0.34 per unit of risk. If you would invest  660.00  in Forth Smart Service on September 12, 2024 and sell it today you would earn a total of  160.00  from holding Forth Smart Service or generate 24.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Forth Smart Service  vs.  Micro Leasing Public

 Performance 
       Timeline  
Forth Smart Service 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Forth Smart Service are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Forth Smart sustained solid returns over the last few months and may actually be approaching a breakup point.
Micro Leasing Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Micro Leasing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Forth Smart and Micro Leasing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Forth Smart and Micro Leasing

The main advantage of trading using opposite Forth Smart and Micro Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forth Smart position performs unexpectedly, Micro Leasing 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 Micro Leasing will offset losses from the drop in Micro Leasing's long position.
The idea behind Forth Smart Service and Micro Leasing Public 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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