Correlation Between FineMat Applied and WinMate Communication

Can any of the company-specific risk be diversified away by investing in both FineMat Applied and WinMate Communication 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 WinMate Communication 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 WinMate Communication INC, you can compare the effects of market volatilities on FineMat Applied and WinMate Communication 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 WinMate Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of FineMat Applied and WinMate Communication.

Diversification Opportunities for FineMat Applied and WinMate Communication

0.2

Correlation Coefficient

FineMat Applied  WinMate Communication

Modest diversification

The 3 months correlation between FineMat and WinMate is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials and WinMate Communication INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinMate Communication INC 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 WinMate Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinMate Communication INC has no effect on the direction of FineMat Applied i.e., FineMat Applied and WinMate Communication go up and down completely randomly.

Pair Corralation between FineMat Applied and WinMate Communication

Assuming the 90 days trading horizon FineMat Applied Materials is expected to under-perform the WinMate Communication. But the stock apears to be less risky and, when comparing its historical volatility, FineMat Applied Materials is 1.49 times less risky than WinMate Communication. The stock trades about -0.06 of its potential returns per unit of risk. The WinMate Communication INC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,100  in WinMate Communication INC on December 24, 2024 and sell it today you would earn a total of  450.00  from holding WinMate Communication INC or generate 2.98% return on investment over 90 days.

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

FineMat Applied Materials  vs.  WinMate Communication INC

FineMat Applied Materials

Risk-Adjusted Performance

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 fairly stable basic indicators, FineMat Applied is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WinMate Communication INC

Risk-Adjusted Performance

Weak

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

Pair Trading with FineMat Applied and WinMate Communication

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

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