Correlation Between Astar and Fwog

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

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

Diversification Opportunities for Astar and Fwog

0.22

Correlation Coefficient

Astar  Fwog

Modest diversification

The 3 months correlation between Astar and Fwog is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Fwog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fwog and Astar 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 Astar are associated (or correlated) with Fwog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fwog has no effect on the direction of Astar i.e., Astar and Fwog go up and down completely randomly.

Pair Corralation between Astar and Fwog

Assuming the 90 days trading horizon Astar is expected to under-perform the Fwog. But the crypto coin apears to be less risky and, when comparing its historical volatility, Astar is 19.95 times less risky than Fwog. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Fwog is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Fwog on October 12, 2024 and sell it today you would earn a total of  18.00  from holding Fwog or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.53%
Values	Daily Returns

Astar  vs.  Fwog

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fwog

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fwog are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Fwog exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and Fwog

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

The idea behind Astar and Fwog 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.