Correlation Between Feintool International and Forbo Holding
Can any of the company-specific risk be diversified away by investing in both Feintool International and Forbo Holding 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 Feintool International and Forbo Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feintool International Holding and Forbo Holding AG, you can compare the effects of market volatilities on Feintool International and Forbo Holding 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 Feintool International with a short position of Forbo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feintool International and Forbo Holding.
Diversification Opportunities for Feintool International and Forbo Holding
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feintool and Forbo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Feintool International Holding and Forbo Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forbo Holding AG and Feintool International 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 Feintool International Holding are associated (or correlated) with Forbo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forbo Holding AG has no effect on the direction of Feintool International i.e., Feintool International and Forbo Holding go up and down completely randomly.
Pair Corralation between Feintool International and Forbo Holding
Assuming the 90 days trading horizon Feintool International Holding is expected to generate 1.29 times more return on investment than Forbo Holding. However, Feintool International is 1.29 times more volatile than Forbo Holding AG. It trades about -0.05 of its potential returns per unit of risk. Forbo Holding AG is currently generating about -0.09 per unit of risk. If you would invest 2,303 in Feintool International Holding on August 31, 2024 and sell it today you would lose (748.00) from holding Feintool International Holding or give up 32.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Feintool International Holding vs. Forbo Holding AG
Performance |
| Timeline |
| Feintool International |
| Forbo Holding AG |
Feintool International and Forbo Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feintool International and Forbo Holding
The main advantage of trading using opposite Feintool International and Forbo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feintool International position performs unexpectedly, Forbo Holding 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 Forbo Holding will offset losses from the drop in Forbo Holding's long position.| Feintool International vs. Rieter Holding AG | Feintool International vs. Autoneum Holding AG | Feintool International vs. Bucher Industries AG | Feintool International vs. Komax Holding AG |
| Forbo Holding vs. Givaudan SA | Forbo Holding vs. Sika AG | Forbo Holding vs. Lonza Group AG | Forbo Holding vs. SGS SA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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