Correlation Between After You and Forth Smart

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

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

Diversification Opportunities for After You and Forth Smart

0.7

Correlation Coefficient

After You  Forth Smart

Poor diversification

The 3 months correlation between After and Forth is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding After You Public and Forth Smart Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forth Smart Service and After You 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 After You Public are associated (or correlated) with Forth Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forth Smart Service has no effect on the direction of After You i.e., After You and Forth Smart go up and down completely randomly.

Pair Corralation between After You and Forth Smart

Assuming the 90 days horizon After You Public is expected to generate 0.83 times more return on investment than Forth Smart. However, After You Public is 1.2 times less risky than Forth Smart. It trades about 0.03 of its potential returns per unit of risk. Forth Smart Service is currently generating about -0.06 per unit of risk. If you would invest  1,070  in After You Public on September 22, 2024 and sell it today you would earn a total of  10.00  from holding After You Public or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

After You Public  vs.  Forth Smart Service

After You Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in After You Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, After You may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Forth Smart Service

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forth Smart Service are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Forth Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with After You and Forth Smart

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

The idea behind After You Public and Forth Smart Service 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.