Correlation Between AECOM TECHNOLOGY and FORTEC ELEKTRONIK

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

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

Diversification Opportunities for AECOM TECHNOLOGY and FORTEC ELEKTRONIK

0.24

Correlation Coefficient

AECOM TECHNOLOGY  FORTEC ELEKTRONIK

Modest diversification

The 3 months correlation between AECOM and FORTEC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and FORTEC ELEKTRONIK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTEC ELEKTRONIK and AECOM 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 AECOM TECHNOLOGY are associated (or correlated) with FORTEC ELEKTRONIK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTEC ELEKTRONIK has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and FORTEC ELEKTRONIK go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and FORTEC ELEKTRONIK

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to under-perform the FORTEC ELEKTRONIK. But the stock apears to be less risky and, when comparing its historical volatility, AECOM TECHNOLOGY is 1.74 times less risky than FORTEC ELEKTRONIK. The stock trades about -0.21 of its potential returns per unit of risk. The FORTEC ELEKTRONIK is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,980  in FORTEC ELEKTRONIK on October 9, 2024 and sell it today you would lose (30.00) from holding FORTEC ELEKTRONIK or give up 1.52% of portfolio value over 90 days.

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

AECOM TECHNOLOGY  vs.  FORTEC ELEKTRONIK

AECOM TECHNOLOGY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FORTEC ELEKTRONIK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FORTEC ELEKTRONIK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FORTEC ELEKTRONIK is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AECOM TECHNOLOGY and FORTEC ELEKTRONIK

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

The idea behind AECOM TECHNOLOGY and FORTEC ELEKTRONIK 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.