Correlation Between FineMat Applied and Good Finance

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

Diversification Opportunities for FineMat Applied and Good Finance

0.68

Correlation Coefficient

FineMat Applied  Good Finance

Poor diversification

The 3 months correlation between FineMat and Good is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities 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 Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of FineMat Applied i.e., FineMat Applied and Good Finance go up and down completely randomly.

Pair Corralation between FineMat Applied and Good Finance

Assuming the 90 days trading horizon FineMat Applied Materials is expected to under-perform the Good Finance. In addition to that, FineMat Applied is 2.32 times more volatile than Good Finance Securities. It trades about -0.07 of its total potential returns per unit of risk. Good Finance Securities is currently generating about -0.09 per unit of volatility. If you would invest  2,515  in Good Finance Securities on October 10, 2024 and sell it today you would lose (140.00) from holding Good Finance Securities or give up 5.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

FineMat Applied Materials  vs.  Good Finance Securities

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 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.

Good Finance Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Finance Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Good Finance 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 Good Finance

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

The idea behind FineMat Applied Materials and Good Finance Securities 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.