Correlation Between SANOK RUBBER and FORTEC Elektronik

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

By analyzing existing cross correlation between SANOK RUBBER ZY and FORTEC Elektronik AG, you can compare the effects of market volatilities on SANOK RUBBER and FORTEC Elektronik 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 SANOK RUBBER with a short position of FORTEC Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOK RUBBER and FORTEC Elektronik.

Diversification Opportunities for SANOK RUBBER and FORTEC Elektronik

-0.05

Correlation Coefficient

SANOK RUBBER  FORTEC Elektronik

Good diversification

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

Pair Corralation between SANOK RUBBER and FORTEC Elektronik

Assuming the 90 days horizon SANOK RUBBER ZY is expected to generate 0.99 times more return on investment than FORTEC Elektronik. However, SANOK RUBBER ZY is 1.02 times less risky than FORTEC Elektronik. It trades about 0.44 of its potential returns per unit of risk. FORTEC Elektronik AG is currently generating about 0.01 per unit of risk. If you would invest  440.00  in SANOK RUBBER ZY on October 8, 2024 and sell it today you would earn a total of  67.00  from holding SANOK RUBBER ZY or generate 15.23% return on investment over 90 days.

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

SANOK RUBBER ZY  vs.  FORTEC Elektronik AG

SANOK RUBBER ZY

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

FORTEC Elektronik

Risk-Adjusted Performance

3 of 100

Very Weak

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

Pair Trading with SANOK RUBBER and FORTEC Elektronik

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

The idea behind SANOK RUBBER ZY and FORTEC Elektronik 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.