Correlation Between FORMPIPE SOFTWARE and SFC Energy
Can any of the company-specific risk be diversified away by investing in both FORMPIPE SOFTWARE and SFC Energy 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 FORMPIPE SOFTWARE and SFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and SFC Energy AG, you can compare the effects of market volatilities on FORMPIPE SOFTWARE and SFC Energy 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 FORMPIPE SOFTWARE with a short position of SFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and SFC Energy.
Diversification Opportunities for FORMPIPE SOFTWARE and SFC Energy
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FORMPIPE and SFC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and SFC Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFC Energy AG and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB are associated (or correlated) with SFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFC Energy AG has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and SFC Energy go up and down completely randomly.
Pair Corralation between FORMPIPE SOFTWARE and SFC Energy
Assuming the 90 days horizon FORMPIPE SOFTWARE is expected to generate 1.39 times less return on investment than SFC Energy. But when comparing it to its historical volatility, FORMPIPE SOFTWARE AB is 1.28 times less risky than SFC Energy. It trades about 0.12 of its potential returns per unit of risk. SFC Energy AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,732 in SFC Energy AG on December 30, 2024 and sell it today you would earn a total of 493.00 from holding SFC Energy AG or generate 28.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
FORMPIPE SOFTWARE AB vs. SFC Energy AG
Performance |
Timeline |
FORMPIPE SOFTWARE |
SFC Energy AG |
Risk-Adjusted Performance
OK
Weak | Strong |
FORMPIPE SOFTWARE and SFC Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FORMPIPE SOFTWARE and SFC Energy
The main advantage of trading using opposite FORMPIPE SOFTWARE and SFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORMPIPE SOFTWARE position performs unexpectedly, SFC Energy 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 SFC Energy will offset losses from the drop in SFC Energy's long position.FORMPIPE SOFTWARE vs. Microchip Technology Incorporated | FORMPIPE SOFTWARE vs. Casio Computer CoLtd | FORMPIPE SOFTWARE vs. COMBA TELECOM SYST | FORMPIPE SOFTWARE vs. Vishay Intertechnology |
SFC Energy vs. Shenandoah Telecommunications | SFC Energy vs. T MOBILE US | SFC Energy vs. NTG Nordic Transport | SFC Energy vs. NAGOYA RAILROAD |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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