Correlation Between Transcend Information and Fortune Information

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

By analyzing existing cross correlation between Transcend Information and Fortune Information Systems, you can compare the effects of market volatilities on Transcend Information and Fortune Information 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 Transcend Information with a short position of Fortune Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcend Information and Fortune Information.

Diversification Opportunities for Transcend Information and Fortune Information

0.74

Correlation Coefficient

Transcend Information  Fortune Information

Poor diversification

The 3 months correlation between Transcend and Fortune is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Transcend Information and Fortune Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Information and Transcend Information 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 Transcend Information are associated (or correlated) with Fortune Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Information has no effect on the direction of Transcend Information i.e., Transcend Information and Fortune Information go up and down completely randomly.

Pair Corralation between Transcend Information and Fortune Information

Assuming the 90 days trading horizon Transcend Information is expected to generate 4.72 times less return on investment than Fortune Information. But when comparing it to its historical volatility, Transcend Information is 2.54 times less risky than Fortune Information. It trades about 0.16 of its potential returns per unit of risk. Fortune Information Systems is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,855  in Fortune Information Systems on December 26, 2024 and sell it today you would earn a total of  3,065  from holding Fortune Information Systems or generate 107.36% return on investment over 90 days.

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

Transcend Information  vs.  Fortune Information Systems

Transcend Information

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transcend Information are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Transcend Information showed solid returns over the last few months and may actually be approaching a breakup point.

Fortune Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Information Systems are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fortune Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transcend Information and Fortune Information

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

The idea behind Transcend Information and Fortune Information Systems 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.