Correlation Between Indutrade and Fletcher King

Can any of the company-specific risk be diversified away by investing in both Indutrade and Fletcher King 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 Indutrade and Fletcher King into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indutrade AB and Fletcher King Plc, you can compare the effects of market volatilities on Indutrade and Fletcher King 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 Indutrade with a short position of Fletcher King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Fletcher King.

Diversification Opportunities for Indutrade and Fletcher King

0.54

Correlation Coefficient

Indutrade  Fletcher King

Very weak diversification

The 3 months correlation between Indutrade and Fletcher is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Fletcher King Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fletcher King Plc and Indutrade 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 Indutrade AB are associated (or correlated) with Fletcher King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fletcher King Plc has no effect on the direction of Indutrade i.e., Indutrade and Fletcher King go up and down completely randomly.

Pair Corralation between Indutrade and Fletcher King

Assuming the 90 days trading horizon Indutrade AB is expected to generate 0.46 times more return on investment than Fletcher King. However, Indutrade AB is 2.18 times less risky than Fletcher King. It trades about -0.05 of its potential returns per unit of risk. Fletcher King Plc is currently generating about -0.12 per unit of risk. If you would invest  30,210  in Indutrade AB on September 13, 2024 and sell it today you would lose (1,560) from holding Indutrade AB or give up 5.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Indutrade AB  vs.  Fletcher King Plc

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Indutrade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fletcher King Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fletcher King Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Indutrade and Fletcher King

The main advantage of trading using opposite Indutrade and Fletcher King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Fletcher King 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 Fletcher King will offset losses from the drop in Fletcher King's long position.

The idea behind Indutrade AB and Fletcher King Plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.