Correlation Between Birkenstock Holding and Forward Industries

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

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

Diversification Opportunities for Birkenstock Holding and Forward Industries

0.77

Correlation Coefficient

Birkenstock Holding  Forward Industries

Poor diversification

The 3 months correlation between Birkenstock and Forward is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Birkenstock Holding plc and Forward Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Industries and Birkenstock Holding 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 Birkenstock Holding plc are associated (or correlated) with Forward Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Industries has no effect on the direction of Birkenstock Holding i.e., Birkenstock Holding and Forward Industries go up and down completely randomly.

Pair Corralation between Birkenstock Holding and Forward Industries

Given the investment horizon of 90 days Birkenstock Holding plc is expected to under-perform the Forward Industries. But the stock apears to be less risky and, when comparing its historical volatility, Birkenstock Holding plc is 1.77 times less risky than Forward Industries. The stock trades about -0.14 of its potential returns per unit of risk. The Forward Industries is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  505.00  in Forward Industries on December 30, 2024 and sell it today you would lose (102.00) from holding Forward Industries or give up 20.2% of portfolio value over 90 days.

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

Birkenstock Holding plc  vs.  Forward Industries

Birkenstock Holding plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Birkenstock Holding plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Forward Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forward Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Birkenstock Holding and Forward Industries

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

The idea behind Birkenstock Holding plc and Forward Industries 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.