Correlation Between FLOW TRADERS and Global Fashion
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and Global Fashion 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 FLOW TRADERS and Global Fashion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Global Fashion Group, you can compare the effects of market volatilities on FLOW TRADERS and Global Fashion 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 FLOW TRADERS with a short position of Global Fashion. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Global Fashion.
Diversification Opportunities for FLOW TRADERS and Global Fashion
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and Global is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Global Fashion Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fashion Group and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with Global Fashion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fashion Group has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and Global Fashion go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Global Fashion
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.24 times more return on investment than Global Fashion. However, FLOW TRADERS LTD is 4.12 times less risky than Global Fashion. It trades about 0.01 of its potential returns per unit of risk. Global Fashion Group is currently generating about -0.01 per unit of risk. If you would invest 2,066 in FLOW TRADERS LTD on September 5, 2024 and sell it today you would earn a total of 50.00 from holding FLOW TRADERS LTD or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Global Fashion Group
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Global Fashion Group |
FLOW TRADERS and Global Fashion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Global Fashion
The main advantage of trading using opposite FLOW TRADERS and Global Fashion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, Global Fashion 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 Global Fashion will offset losses from the drop in Global Fashion's long position.| FLOW TRADERS vs. Tyson Foods | FLOW TRADERS vs. AGRICULTBK HADR25 YC | FLOW TRADERS vs. Penta Ocean Construction Co | FLOW TRADERS vs. Hanison Construction Holdings |
| Global Fashion vs. BURLINGTON STORES | Global Fashion vs. FLOW TRADERS LTD | Global Fashion vs. Vastned Retail NV | Global Fashion vs. Fast Retailing Co |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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