Correlation Between Detection Technology and Fodelia

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

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

Diversification Opportunities for Detection Technology and Fodelia

-0.33

Correlation Coefficient

Detection Technology  Fodelia

Very good diversification

The 3 months correlation between Detection and Fodelia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Detection Technology OY and Fodelia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fodelia and Detection Technology 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 Detection Technology OY are associated (or correlated) with Fodelia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fodelia has no effect on the direction of Detection Technology i.e., Detection Technology and Fodelia go up and down completely randomly.

Pair Corralation between Detection Technology and Fodelia

Assuming the 90 days trading horizon Detection Technology OY is expected to under-perform the Fodelia. In addition to that, Detection Technology is 1.18 times more volatile than Fodelia. It trades about -0.1 of its total potential returns per unit of risk. Fodelia is currently generating about 0.07 per unit of volatility. If you would invest  574.00  in Fodelia on October 8, 2024 and sell it today you would earn a total of  38.00  from holding Fodelia or generate 6.62% return on investment over 90 days.

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

Detection Technology OY  vs.  Fodelia

Detection Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Detection Technology OY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Fodelia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fodelia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Fodelia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Detection Technology and Fodelia

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

The idea behind Detection Technology OY and Fodelia 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 Global Correlations module to find global opportunities by holding instruments from different markets.