Correlation Between Fitters Diversified and Swift Haulage

Can any of the company-specific risk be diversified away by investing in both Fitters Diversified and Swift Haulage 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 Fitters Diversified and Swift Haulage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fitters Diversified Bhd and Swift Haulage Bhd, you can compare the effects of market volatilities on Fitters Diversified and Swift Haulage 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 Fitters Diversified with a short position of Swift Haulage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fitters Diversified and Swift Haulage.

Diversification Opportunities for Fitters Diversified and Swift Haulage

0.13

Correlation Coefficient

Fitters Diversified  Swift Haulage

Average diversification

The 3 months correlation between Fitters and Swift is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fitters Diversified Bhd and Swift Haulage Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Haulage Bhd and Fitters Diversified 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 Fitters Diversified Bhd are associated (or correlated) with Swift Haulage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Haulage Bhd has no effect on the direction of Fitters Diversified i.e., Fitters Diversified and Swift Haulage go up and down completely randomly.

Pair Corralation between Fitters Diversified and Swift Haulage

Assuming the 90 days trading horizon Fitters Diversified Bhd is expected to generate 6.07 times more return on investment than Swift Haulage. However, Fitters Diversified is 6.07 times more volatile than Swift Haulage Bhd. It trades about 0.05 of its potential returns per unit of risk. Swift Haulage Bhd is currently generating about -0.07 per unit of risk. If you would invest  3.50  in Fitters Diversified Bhd on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Fitters Diversified Bhd or generate 0.0% return on investment over 90 days.

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

Fitters Diversified Bhd  vs.  Swift Haulage Bhd

Fitters Diversified Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fitters Diversified Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Fitters Diversified disclosed solid returns over the last few months and may actually be approaching a breakup point.

Swift Haulage Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swift Haulage Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Fitters Diversified and Swift Haulage

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

The idea behind Fitters Diversified Bhd and Swift Haulage Bhd 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.