Correlation Between Cuentas and Friendable

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

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

Diversification Opportunities for Cuentas and Friendable

0.54

Correlation Coefficient

Cuentas  Friendable

Very weak diversification

The 3 months correlation between Cuentas and Friendable is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cuentas and Friendable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friendable and Cuentas 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 Cuentas are associated (or correlated) with Friendable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friendable has no effect on the direction of Cuentas i.e., Cuentas and Friendable go up and down completely randomly.

Pair Corralation between Cuentas and Friendable

Given the investment horizon of 90 days Cuentas is expected to under-perform the Friendable. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cuentas is 2.28 times less risky than Friendable. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Friendable is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.05  in Friendable on October 5, 2024 and sell it today you would lose (1.04) from holding Friendable or give up 99.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.53%
Values	Daily Returns

Cuentas  vs.  Friendable

Cuentas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Friendable

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Friendable are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, Friendable disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cuentas and Friendable

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

The idea behind Cuentas and Friendable 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.