Correlation Between Access Power and FingerMotion

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

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

Diversification Opportunities for Access Power and FingerMotion

0.2

Correlation Coefficient

Access Power  FingerMotion

Modest diversification

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

Pair Corralation between Access Power and FingerMotion

Given the investment horizon of 90 days Access Power Co is expected to generate 2.33 times more return on investment than FingerMotion. However, Access Power is 2.33 times more volatile than FingerMotion. It trades about 0.19 of its potential returns per unit of risk. FingerMotion is currently generating about -0.13 per unit of risk. If you would invest  0.09  in Access Power Co on October 7, 2024 and sell it today you would earn a total of  0.05  from holding Access Power Co or generate 55.56% return on investment over 90 days.

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

Access Power Co  vs.  FingerMotion

Access Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Access Power Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Access Power reported solid returns over the last few months and may actually be approaching a breakup point.

FingerMotion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FingerMotion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Access Power and FingerMotion

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

The idea behind Access Power Co and FingerMotion 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.