Correlation Between Fortinet and Mliuz SA

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

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

Diversification Opportunities for Fortinet and Mliuz SA

-0.85

Correlation Coefficient

Fortinet  Mliuz SA

Pay attention - limited upside

The 3 months correlation between Fortinet and Mliuz is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Mliuz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mliuz SA and Fortinet 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 Fortinet are associated (or correlated) with Mliuz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mliuz SA has no effect on the direction of Fortinet i.e., Fortinet and Mliuz SA go up and down completely randomly.

Pair Corralation between Fortinet and Mliuz SA

Assuming the 90 days trading horizon Fortinet is expected to generate 0.78 times more return on investment than Mliuz SA. However, Fortinet is 1.28 times less risky than Mliuz SA. It trades about 0.27 of its potential returns per unit of risk. Mliuz SA is currently generating about -0.17 per unit of risk. If you would invest  20,940  in Fortinet on October 6, 2024 and sell it today you would earn a total of  9,480  from holding Fortinet or generate 45.27% return on investment over 90 days.

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

Fortinet  vs.  Mliuz SA

Fortinet

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fortinet sustained solid returns over the last few months and may actually be approaching a breakup point.

Mliuz SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mliuz SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fortinet and Mliuz SA

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

The idea behind Fortinet and Mliuz SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.