Correlation Between Fortune Information and Transcend Information

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

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

Diversification Opportunities for Fortune Information and Transcend Information

0.25

Correlation Coefficient

Fortune Information  Transcend Information

Modest diversification

The 3 months correlation between Fortune and Transcend is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Information Systems and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information and Fortune 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 Fortune Information Systems are associated (or correlated) with Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Fortune Information i.e., Fortune Information and Transcend Information go up and down completely randomly.

Pair Corralation between Fortune Information and Transcend Information

Assuming the 90 days trading horizon Fortune Information Systems is expected to generate 2.09 times more return on investment than Transcend Information. However, Fortune Information is 2.09 times more volatile than Transcend Information. It trades about 0.13 of its potential returns per unit of risk. Transcend Information is currently generating about -0.08 per unit of risk. If you would invest  2,290  in Fortune Information Systems on September 13, 2024 and sell it today you would earn a total of  500.00  from holding Fortune Information Systems or generate 21.83% return on investment over 90 days.

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

Fortune Information Systems  vs.  Transcend Information

Fortune Information

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Information Systems are ranked lower than 10 (%) 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.

Transcend Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transcend Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Fortune Information and Transcend Information

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

The idea behind Fortune Information Systems and Transcend Information 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.