Correlation Between DFS Furniture and FORMPIPE SOFTWARE

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Can any of the company-specific risk be diversified away by investing in both DFS Furniture and FORMPIPE SOFTWARE 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 DFS Furniture and FORMPIPE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on DFS Furniture and FORMPIPE SOFTWARE 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 DFS Furniture with a short position of FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and FORMPIPE SOFTWARE.

Diversification Opportunities for DFS Furniture and FORMPIPE SOFTWARE

DFSFORMPIPEDiversified AwayDFSFORMPIPEDiversified Away100%
-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between DFS and FORMPIPE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of DFS Furniture i.e., DFS Furniture and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between DFS Furniture and FORMPIPE SOFTWARE

Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.65 times more return on investment than FORMPIPE SOFTWARE. However, DFS Furniture PLC is 1.55 times less risky than FORMPIPE SOFTWARE. It trades about 0.06 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about -0.05 per unit of risk. If you would invest  163.00  in DFS Furniture PLC on November 18, 2024 and sell it today you would earn a total of  3.00  from holding DFS Furniture PLC or generate 1.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

DFS Furniture PLC  vs.  FORMPIPE SOFTWARE AB

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15DF0 F3J
       Timeline  
DFS Furniture PLC 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DFS Furniture may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.451.51.551.61.651.71.75
FORMPIPE SOFTWARE 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days FORMPIPE SOFTWARE AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORMPIPE SOFTWARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.9522.052.12.152.22.252.32.35

DFS Furniture and FORMPIPE SOFTWARE Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.98-5.23-3.47-1.720.01.793.625.447.27 0.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15DF0 F3J
       Returns  

Pair Trading with DFS Furniture and FORMPIPE SOFTWARE

The main advantage of trading using opposite DFS Furniture and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE's long position.
The idea behind DFS Furniture PLC and FORMPIPE SOFTWARE AB 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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