Correlation Between Pacific Strategic and Fortune Mate

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

By analyzing existing cross correlation between Pacific Strategic Financial and Fortune Mate Indonesia, you can compare the effects of market volatilities on Pacific Strategic and Fortune Mate 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 Pacific Strategic with a short position of Fortune Mate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Strategic and Fortune Mate.

Diversification Opportunities for Pacific Strategic and Fortune Mate

-0.63

Correlation Coefficient

Pacific Strategic  Fortune Mate

Excellent diversification

The 3 months correlation between Pacific and Fortune is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Strategic Financial and Fortune Mate Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Mate Indonesia and Pacific Strategic 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 Pacific Strategic Financial are associated (or correlated) with Fortune Mate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Mate Indonesia has no effect on the direction of Pacific Strategic i.e., Pacific Strategic and Fortune Mate go up and down completely randomly.

Pair Corralation between Pacific Strategic and Fortune Mate

Assuming the 90 days trading horizon Pacific Strategic is expected to generate 12.66 times less return on investment than Fortune Mate. But when comparing it to its historical volatility, Pacific Strategic Financial is 6.81 times less risky than Fortune Mate. It trades about 0.06 of its potential returns per unit of risk. Fortune Mate Indonesia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  40,000  in Fortune Mate Indonesia on December 4, 2024 and sell it today you would earn a total of  6,400  from holding Fortune Mate Indonesia or generate 16.0% return on investment over 90 days.

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

Pacific Strategic Financial  vs.  Fortune Mate Indonesia

Pacific Strategic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Strategic Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pacific Strategic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fortune Mate Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortune Mate Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Fortune Mate is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pacific Strategic and Fortune Mate

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

The idea behind Pacific Strategic Financial and Fortune Mate Indonesia 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.