Correlation Between Investment and FPT Securities

Can any of the company-specific risk be diversified away by investing in both Investment and FPT Securities 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 FPT Securities 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 FPT Securities JSC, you can compare the effects of market volatilities on Investment and FPT Securities 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 FPT Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and FPT Securities.

Diversification Opportunities for Investment and FPT Securities

-0.16

Correlation Coefficient

Investment  FPT Securities

Good diversification

The 3 months correlation between Investment and FPT is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial and FPT Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Securities 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 FPT Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Securities JSC has no effect on the direction of Investment i.e., Investment and FPT Securities go up and down completely randomly.

Pair Corralation between Investment and FPT Securities

Assuming the 90 days trading horizon Investment and Industrial is expected to generate 0.79 times more return on investment than FPT Securities. However, Investment and Industrial is 1.26 times less risky than FPT Securities. It trades about 0.07 of its potential returns per unit of risk. FPT Securities JSC is currently generating about -0.02 per unit of risk. If you would invest  6,560,000  in Investment and Industrial on October 23, 2024 and sell it today you would earn a total of  350,000  from holding Investment and Industrial or generate 5.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Investment and Industrial  vs.  FPT Securities JSC

Investment and Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investment and Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FPT Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FPT Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FPT Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Investment and FPT Securities

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

The idea behind Investment and Industrial and FPT Securities 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.