Correlation Between Ecotel Communication and Fortinet

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

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

Diversification Opportunities for Ecotel Communication and Fortinet

0.2

Correlation Coefficient

Ecotel Communication  Fortinet

Modest diversification

The 3 months correlation between Ecotel and Fortinet is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with Fortinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortinet has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and Fortinet go up and down completely randomly.

Pair Corralation between Ecotel Communication and Fortinet

Assuming the 90 days trading horizon ecotel communication ag is expected to under-perform the Fortinet. But the stock apears to be less risky and, when comparing its historical volatility, ecotel communication ag is 1.79 times less risky than Fortinet. The stock trades about -0.02 of its potential returns per unit of risk. The Fortinet is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  7,422  in Fortinet on October 25, 2024 and sell it today you would earn a total of  1,960  from holding Fortinet or generate 26.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ecotel communication ag  vs.  Fortinet

ecotel communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ecotel communication ag has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Ecotel Communication is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Fortinet

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fortinet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecotel Communication and Fortinet

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

The idea behind ecotel communication ag and Fortinet 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 Commodity Directory module to find actively traded commodities issued by global exchanges.