Correlation Between FATFISH GROUP and LGI Homes

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

By analyzing existing cross correlation between FATFISH GROUP LTD and LGI Homes, you can compare the effects of market volatilities on FATFISH GROUP and LGI Homes 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 FATFISH GROUP with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of FATFISH GROUP and LGI Homes.

Diversification Opportunities for FATFISH GROUP and LGI Homes

-0.04

Correlation Coefficient

FATFISH GROUP  LGI Homes

Good diversification

The 3 months correlation between FATFISH and LGI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FATFISH GROUP LTD and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and FATFISH GROUP 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 FATFISH GROUP LTD are associated (or correlated) with LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of FATFISH GROUP i.e., FATFISH GROUP and LGI Homes go up and down completely randomly.

Pair Corralation between FATFISH GROUP and LGI Homes

Assuming the 90 days horizon FATFISH GROUP LTD is expected to generate 9.52 times more return on investment than LGI Homes. However, FATFISH GROUP is 9.52 times more volatile than LGI Homes. It trades about 0.09 of its potential returns per unit of risk. LGI Homes is currently generating about -0.17 per unit of risk. If you would invest  0.45  in FATFISH GROUP LTD on December 28, 2024 and sell it today you would earn a total of  0.10  from holding FATFISH GROUP LTD or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

FATFISH GROUP LTD  vs.  LGI Homes

FATFISH GROUP LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FATFISH GROUP LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FATFISH GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

LGI Homes

Risk-Adjusted Performance

Very Weak

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

Pair Trading with FATFISH GROUP and LGI Homes

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

The idea behind FATFISH GROUP LTD and LGI Homes 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.