Correlation Between Investment and FIT INVEST

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

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

Diversification Opportunities for Investment and FIT INVEST

0.5

Correlation Coefficient

Investment  FIT INVEST

Very weak diversification

The 3 months correlation between Investment and FIT is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC and Investment 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 Investment and Industrial are associated (or correlated) with FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of Investment i.e., Investment and FIT INVEST go up and down completely randomly.

Pair Corralation between Investment and FIT INVEST

Assuming the 90 days trading horizon Investment and Industrial is expected to generate 1.3 times more return on investment than FIT INVEST. However, Investment is 1.3 times more volatile than FIT INVEST JSC. It trades about 0.12 of its potential returns per unit of risk. FIT INVEST JSC is currently generating about 0.14 per unit of risk. If you would invest  6,980,000  in Investment and Industrial on December 30, 2024 and sell it today you would earn a total of  780,000  from holding Investment and Industrial or generate 11.17% return on investment over 90 days.

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

Investment and Industrial  vs.  FIT INVEST JSC

Investment and Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investment and Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FIT INVEST JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FIT INVEST may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Investment and FIT INVEST

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

The idea behind Investment and Industrial and FIT INVEST JSC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.