Correlation Between FocalTech Systems and Wholetech System

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

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

Diversification Opportunities for FocalTech Systems and Wholetech System

-0.29

Correlation Coefficient

FocalTech Systems  Wholetech System

Very good diversification

The 3 months correlation between FocalTech and Wholetech is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Wholetech System Hitech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wholetech System Hitech and FocalTech Systems 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 FocalTech Systems Co are associated (or correlated) with Wholetech System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wholetech System Hitech has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and Wholetech System go up and down completely randomly.

Pair Corralation between FocalTech Systems and Wholetech System

Assuming the 90 days trading horizon FocalTech Systems is expected to generate 3.63 times less return on investment than Wholetech System. But when comparing it to its historical volatility, FocalTech Systems Co is 1.02 times less risky than Wholetech System. It trades about 0.03 of its potential returns per unit of risk. Wholetech System Hitech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,032  in Wholetech System Hitech on October 10, 2024 and sell it today you would earn a total of  7,668  from holding Wholetech System Hitech or generate 190.18% return on investment over 90 days.

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

FocalTech Systems Co  vs.  Wholetech System Hitech

FocalTech Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FocalTech Systems Co 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.

Wholetech System Hitech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wholetech System Hitech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wholetech System showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FocalTech Systems and Wholetech System

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

The idea behind FocalTech Systems Co and Wholetech System Hitech 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.