Correlation Between FLOW TRADERS and 3D Systems

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Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and 3D Systems 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 3D Systems 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 3D Systems, you can compare the effects of market volatilities on FLOW TRADERS and 3D Systems 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 3D Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and 3D Systems.

Diversification Opportunities for FLOW TRADERS and 3D Systems

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between FLOW and SYV is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and 3D Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Systems 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 3D Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Systems has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and 3D Systems go up and down completely randomly.

Pair Corralation between FLOW TRADERS and 3D Systems

Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.18 times more return on investment than 3D Systems. However, FLOW TRADERS LTD is 5.44 times less risky than 3D Systems. It trades about 0.07 of its potential returns per unit of risk. 3D Systems is currently generating about -0.1 per unit of risk. If you would invest  2,042  in FLOW TRADERS LTD on September 6, 2024 and sell it today you would earn a total of  38.00  from holding FLOW TRADERS LTD or generate 1.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

FLOW TRADERS LTD  vs.  3D Systems

 Performance 
       Timeline  
FLOW TRADERS LTD 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.
3D Systems 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in 3D Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, 3D Systems reported solid returns over the last few months and may actually be approaching a breakup point.

FLOW TRADERS and 3D Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FLOW TRADERS and 3D Systems

The main advantage of trading using opposite FLOW TRADERS and 3D Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, 3D Systems 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 3D Systems will offset losses from the drop in 3D Systems' long position.
The idea behind FLOW TRADERS LTD and 3D Systems 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.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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