Correlation Between Focus Home and AlzChem Group

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

By analyzing existing cross correlation between Focus Home Interactive and AlzChem Group AG, you can compare the effects of market volatilities on Focus Home and AlzChem Group 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 Focus Home with a short position of AlzChem Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and AlzChem Group.

Diversification Opportunities for Focus Home and AlzChem Group

0.07

Correlation Coefficient

Focus Home  AlzChem Group

Significant diversification

The 3 months correlation between Focus and AlzChem is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and AlzChem Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlzChem Group AG and Focus Home 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 Focus Home Interactive are associated (or correlated) with AlzChem Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlzChem Group AG has no effect on the direction of Focus Home i.e., Focus Home and AlzChem Group go up and down completely randomly.

Pair Corralation between Focus Home and AlzChem Group

Assuming the 90 days horizon Focus Home is expected to generate 1.54 times less return on investment than AlzChem Group. In addition to that, Focus Home is 1.45 times more volatile than AlzChem Group AG. It trades about 0.11 of its total potential returns per unit of risk. AlzChem Group AG is currently generating about 0.25 per unit of volatility. If you would invest  5,680  in AlzChem Group AG on October 24, 2024 and sell it today you would earn a total of  740.00  from holding AlzChem Group AG or generate 13.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Focus Home Interactive  vs.  AlzChem Group AG

Focus Home Interactive

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Focus Home is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

AlzChem Group AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AlzChem Group AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AlzChem Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Focus Home and AlzChem Group

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

The idea behind Focus Home Interactive and AlzChem Group AG 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.