Correlation Between Dantax and FOM Technologies

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

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

Diversification Opportunities for Dantax and FOM Technologies

-0.19

Correlation Coefficient

Dantax  FOM Technologies

Good diversification

The 3 months correlation between Dantax and FOM is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dantax and FOM Technologies AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOM Technologies and Dantax 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 Dantax are associated (or correlated) with FOM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOM Technologies has no effect on the direction of Dantax i.e., Dantax and FOM Technologies go up and down completely randomly.

Pair Corralation between Dantax and FOM Technologies

Assuming the 90 days trading horizon Dantax is expected to generate 0.51 times more return on investment than FOM Technologies. However, Dantax is 1.96 times less risky than FOM Technologies. It trades about 0.11 of its potential returns per unit of risk. FOM Technologies AS is currently generating about -0.06 per unit of risk. If you would invest  42,800  in Dantax on December 21, 2024 and sell it today you would earn a total of  5,400  from holding Dantax or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Dantax  vs.  FOM Technologies AS

Dantax

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dantax are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dantax displayed solid returns over the last few months and may actually be approaching a breakup point.

FOM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days FOM Technologies AS 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 primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dantax and FOM Technologies

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

The idea behind Dantax and FOM Technologies AS 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.