Correlation Between Applied Materials and Fonix Mobile

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

By analyzing existing cross correlation between Applied Materials and Fonix Mobile plc, you can compare the effects of market volatilities on Applied Materials and Fonix Mobile 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 Applied Materials with a short position of Fonix Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Fonix Mobile.

Diversification Opportunities for Applied Materials and Fonix Mobile

0.05

Correlation Coefficient

Applied Materials  Fonix Mobile

Significant diversification

The 3 months correlation between Applied and Fonix is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Fonix Mobile plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonix Mobile plc and Applied Materials 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 Applied Materials are associated (or correlated) with Fonix Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonix Mobile plc has no effect on the direction of Applied Materials i.e., Applied Materials and Fonix Mobile go up and down completely randomly.

Pair Corralation between Applied Materials and Fonix Mobile

Assuming the 90 days trading horizon Applied Materials is expected to under-perform the Fonix Mobile. In addition to that, Applied Materials is 1.13 times more volatile than Fonix Mobile plc. It trades about -0.08 of its total potential returns per unit of risk. Fonix Mobile plc is currently generating about -0.01 per unit of volatility. If you would invest  23,346  in Fonix Mobile plc on September 30, 2024 and sell it today you would lose (1,396) from holding Fonix Mobile plc or give up 5.98% of portfolio value over 90 days.

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

Applied Materials  vs.  Fonix Mobile plc

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fonix Mobile plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fonix Mobile plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Fonix Mobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Applied Materials and Fonix Mobile

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

The idea behind Applied Materials and Fonix Mobile 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.