Correlation Between Converge Information and Filinvest Development

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

By analyzing existing cross correlation between Converge Information Communications and Filinvest Development Coproration, you can compare the effects of market volatilities on Converge Information and Filinvest Development 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 Converge Information with a short position of Filinvest Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and Filinvest Development.

Diversification Opportunities for Converge Information and Filinvest Development

0.35

Correlation Coefficient

Converge Information  Filinvest Development

Weak diversification

The 3 months correlation between Converge and Filinvest is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and Filinvest Development Coprorat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filinvest Development and Converge Information 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 Converge Information Communications are associated (or correlated) with Filinvest Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filinvest Development has no effect on the direction of Converge Information i.e., Converge Information and Filinvest Development go up and down completely randomly.

Pair Corralation between Converge Information and Filinvest Development

Assuming the 90 days trading horizon Converge Information Communications is expected to generate 1.69 times more return on investment than Filinvest Development. However, Converge Information is 1.69 times more volatile than Filinvest Development Coproration. It trades about 0.01 of its potential returns per unit of risk. Filinvest Development Coproration is currently generating about -0.23 per unit of risk. If you would invest  1,658  in Converge Information Communications on October 9, 2024 and sell it today you would lose (8.00) from holding Converge Information Communications or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.93%
Values	Daily Returns

Converge Information Communica  vs.  Filinvest Development Coprorat

Converge Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Converge Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Converge Information is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Filinvest Development

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Converge Information and Filinvest Development

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

The idea behind Converge Information Communications and Filinvest Development Coproration 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.