Correlation Between BIMobject and FormPipe Software

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

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

Diversification Opportunities for BIMobject and FormPipe Software

-0.4

Correlation Coefficient

BIMobject  FormPipe Software

Very good diversification

The 3 months correlation between BIMobject and FormPipe is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BIMobject AB and FormPipe Software AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormPipe Software and BIMobject 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 BIMobject AB are associated (or correlated) with FormPipe Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormPipe Software has no effect on the direction of BIMobject i.e., BIMobject and FormPipe Software go up and down completely randomly.

Pair Corralation between BIMobject and FormPipe Software

Assuming the 90 days trading horizon BIMobject AB is expected to generate 0.77 times more return on investment than FormPipe Software. However, BIMobject AB is 1.29 times less risky than FormPipe Software. It trades about 0.04 of its potential returns per unit of risk. FormPipe Software AB is currently generating about -0.09 per unit of risk. If you would invest  441.00  in BIMobject AB on September 24, 2024 and sell it today you would earn a total of  5.00  from holding BIMobject AB or generate 1.13% return on investment over 90 days.

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

BIMobject AB  vs.  FormPipe Software AB

BIMobject AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIMobject AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, BIMobject may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FormPipe Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormPipe Software AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BIMobject and FormPipe Software

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

The idea behind BIMobject AB and FormPipe Software AB 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.