Correlation Between Fortescue Metals and SERI INDUSTRIAL
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and SERI INDUSTRIAL 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 Fortescue Metals and SERI INDUSTRIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and SERI INDUSTRIAL EO, you can compare the effects of market volatilities on Fortescue Metals and SERI INDUSTRIAL 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 Fortescue Metals with a short position of SERI INDUSTRIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and SERI INDUSTRIAL.
Diversification Opportunities for Fortescue Metals and SERI INDUSTRIAL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fortescue and SERI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO and Fortescue Metals 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 Fortescue Metals Group are associated (or correlated) with SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and SERI INDUSTRIAL go up and down completely randomly.
Pair Corralation between Fortescue Metals and SERI INDUSTRIAL
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the SERI INDUSTRIAL. But the stock apears to be less risky and, when comparing its historical volatility, Fortescue Metals Group is 1.49 times less risky than SERI INDUSTRIAL. The stock trades about -0.44 of its potential returns per unit of risk. The SERI INDUSTRIAL EO is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 271.00 in SERI INDUSTRIAL EO on October 12, 2024 and sell it today you would lose (31.00) from holding SERI INDUSTRIAL EO or give up 11.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. SERI INDUSTRIAL EO
Performance |
| Timeline |
| Fortescue Metals |
| SERI INDUSTRIAL EO |
Fortescue Metals and SERI INDUSTRIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and SERI INDUSTRIAL
The main advantage of trading using opposite Fortescue Metals and SERI INDUSTRIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, SERI INDUSTRIAL 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 SERI INDUSTRIAL will offset losses from the drop in SERI INDUSTRIAL's long position.| Fortescue Metals vs. Sinopec Shanghai Petrochemical | Fortescue Metals vs. Mitsui Chemicals | Fortescue Metals vs. EBRO FOODS | Fortescue Metals vs. X FAB Silicon Foundries |
| SERI INDUSTRIAL vs. TOREX SEMICONDUCTOR LTD | SERI INDUSTRIAL vs. Fast Retailing Co | SERI INDUSTRIAL vs. Tradeweb Markets | SERI INDUSTRIAL vs. FAST RETAIL ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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