Correlation Between Fun Yours and Soft World

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

By analyzing existing cross correlation between Fun Yours Technology and Soft World International, you can compare the effects of market volatilities on Fun Yours and Soft World 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 Fun Yours with a short position of Soft World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fun Yours and Soft World.

Diversification Opportunities for Fun Yours and Soft World

0.23

Correlation Coefficient

Fun Yours  Soft World

Modest diversification

The 3 months correlation between Fun and Soft is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fun Yours Technology and Soft World International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soft World International and Fun Yours 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 Fun Yours Technology are associated (or correlated) with Soft World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soft World International has no effect on the direction of Fun Yours i.e., Fun Yours and Soft World go up and down completely randomly.

Pair Corralation between Fun Yours and Soft World

Assuming the 90 days trading horizon Fun Yours Technology is expected to generate 2.36 times more return on investment than Soft World. However, Fun Yours is 2.36 times more volatile than Soft World International. It trades about 0.09 of its potential returns per unit of risk. Soft World International is currently generating about 0.03 per unit of risk. If you would invest  4,935  in Fun Yours Technology on December 20, 2024 and sell it today you would earn a total of  585.00  from holding Fun Yours Technology or generate 11.85% return on investment over 90 days.

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

Fun Yours Technology  vs.  Soft World International

Fun Yours Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fun Yours Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fun Yours showed solid returns over the last few months and may actually be approaching a breakup point.

Soft World International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soft World International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Soft World is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fun Yours and Soft World

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

The idea behind Fun Yours Technology and Soft World International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.