Correlation Between Walton Advanced and FIT Holding

Can any of the company-specific risk be diversified away by investing in both Walton Advanced and FIT Holding 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 Walton Advanced and FIT Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walton Advanced Engineering and FIT Holding Co, you can compare the effects of market volatilities on Walton Advanced and FIT Holding 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 Walton Advanced with a short position of FIT Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walton Advanced and FIT Holding.

Diversification Opportunities for Walton Advanced and FIT Holding

-0.61

Correlation Coefficient

Walton Advanced  FIT Holding

Excellent diversification

The 3 months correlation between Walton and FIT is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Walton Advanced Engineering and FIT Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT Holding and Walton Advanced 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 Walton Advanced Engineering are associated (or correlated) with FIT Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT Holding has no effect on the direction of Walton Advanced i.e., Walton Advanced and FIT Holding go up and down completely randomly.

Pair Corralation between Walton Advanced and FIT Holding

Assuming the 90 days trading horizon Walton Advanced is expected to generate 3.28 times less return on investment than FIT Holding. But when comparing it to its historical volatility, Walton Advanced Engineering is 1.18 times less risky than FIT Holding. It trades about 0.03 of its potential returns per unit of risk. FIT Holding Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,613  in FIT Holding Co on September 29, 2024 and sell it today you would earn a total of  3,577  from holding FIT Holding Co or generate 136.89% return on investment over 90 days.

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

Walton Advanced Engineering  vs.  FIT Holding Co

Walton Advanced Engi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walton Advanced Engineering 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

FIT Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIT Holding Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FIT Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walton Advanced and FIT Holding

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

The idea behind Walton Advanced Engineering and FIT Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.