Correlation Between Caspian Services and Fomo Worldwide

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

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

Diversification Opportunities for Caspian Services and Fomo Worldwide

-0.92

Correlation Coefficient

Caspian Services  Fomo Worldwide

Pay attention - limited upside

The 3 months correlation between Caspian and Fomo is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Caspian Services and Fomo Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomo Worldwide and Caspian Services 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 Caspian Services are associated (or correlated) with Fomo Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomo Worldwide has no effect on the direction of Caspian Services i.e., Caspian Services and Fomo Worldwide go up and down completely randomly.

Pair Corralation between Caspian Services and Fomo Worldwide

Given the investment horizon of 90 days Caspian Services is expected to generate 11.98 times less return on investment than Fomo Worldwide. But when comparing it to its historical volatility, Caspian Services is 3.48 times less risky than Fomo Worldwide. It trades about 0.05 of its potential returns per unit of risk. Fomo Worldwide is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Fomo Worldwide on September 23, 2024 and sell it today you would lose (0.60) from holding Fomo Worldwide or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	38.55%
Values	Daily Returns

Caspian Services  vs.  Fomo Worldwide

Caspian Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caspian Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Caspian Services showed solid returns over the last few months and may actually be approaching a breakup point.

Fomo Worldwide

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fomo Worldwide are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fomo Worldwide unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caspian Services and Fomo Worldwide

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

The idea behind Caspian Services and Fomo Worldwide 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.