Correlation Between Focus Home and Minerals Technologies

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

Diversification Opportunities for Focus Home and Minerals Technologies

-0.28

Correlation Coefficient

Focus Home  Minerals Technologies

Very good diversification

The 3 months correlation between Focus and Minerals is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Focus Home i.e., Focus Home and Minerals Technologies go up and down completely randomly.

Pair Corralation between Focus Home and Minerals Technologies

Assuming the 90 days horizon Focus Home is expected to generate 1.36 times less return on investment than Minerals Technologies. In addition to that, Focus Home is 1.86 times more volatile than Minerals Technologies. It trades about 0.02 of its total potential returns per unit of risk. Minerals Technologies is currently generating about 0.04 per unit of volatility. If you would invest  7,139  in Minerals Technologies on October 24, 2024 and sell it today you would earn a total of  261.00  from holding Minerals Technologies or generate 3.66% return on investment over 90 days.

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

Focus Home Interactive  vs.  Minerals Technologies

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.

Minerals Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Minerals Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Focus Home and Minerals Technologies

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

The idea behind Focus Home Interactive and Minerals Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.