Correlation Between FineMat Applied and Ability Enterprise

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

By analyzing existing cross correlation between FineMat Applied Materials and Ability Enterprise Co, you can compare the effects of market volatilities on FineMat Applied and Ability Enterprise 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 FineMat Applied with a short position of Ability Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of FineMat Applied and Ability Enterprise.

Diversification Opportunities for FineMat Applied and Ability Enterprise

-0.41

Correlation Coefficient

FineMat Applied  Ability Enterprise

Very good diversification

The 3 months correlation between FineMat and Ability is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials and Ability Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ability Enterprise and FineMat Applied 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 FineMat Applied Materials are associated (or correlated) with Ability Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ability Enterprise has no effect on the direction of FineMat Applied i.e., FineMat Applied and Ability Enterprise go up and down completely randomly.

Pair Corralation between FineMat Applied and Ability Enterprise

Assuming the 90 days trading horizon FineMat Applied Materials is expected to under-perform the Ability Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, FineMat Applied Materials is 1.43 times less risky than Ability Enterprise. The stock trades about -0.12 of its potential returns per unit of risk. The Ability Enterprise Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,845  in Ability Enterprise Co on October 8, 2024 and sell it today you would earn a total of  1,425  from holding Ability Enterprise Co or generate 29.41% return on investment over 90 days.

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

FineMat Applied Materials  vs.  Ability Enterprise Co

FineMat Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FineMat Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ability Enterprise

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ability Enterprise Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ability Enterprise showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FineMat Applied and Ability Enterprise

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

The idea behind FineMat Applied Materials and Ability Enterprise Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .