Correlation Between FORMPIPE SOFTWARE and FORTEC ELEKTRONIK

Can any of the company-specific risk be diversified away by investing in both FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE and FORTEC ELEKTRONIK 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 FORTEC ELEKTRONIK , you can compare the effects of market volatilities on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE with a short position of FORTEC ELEKTRONIK. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and FORTEC ELEKTRONIK.

Diversification Opportunities for FORMPIPE SOFTWARE and FORTEC ELEKTRONIK

0.33

Correlation Coefficient

FORMPIPE SOFTWARE  FORTEC ELEKTRONIK

Weak diversification

The 3 months correlation between FORMPIPE and FORTEC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and FORTEC ELEKTRONIK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTEC ELEKTRONIK 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 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 FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and FORTEC ELEKTRONIK go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and FORTEC ELEKTRONIK

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 1.6 times more return on investment than FORTEC ELEKTRONIK. However, FORMPIPE SOFTWARE is 1.6 times more volatile than FORTEC ELEKTRONIK . It trades about 0.06 of its potential returns per unit of risk. FORTEC ELEKTRONIK is currently generating about 0.03 per unit of risk. If you would invest  202.00  in FORMPIPE SOFTWARE AB on October 11, 2024 and sell it today you would earn a total of  17.00  from holding FORMPIPE SOFTWARE AB or generate 8.42% return on investment over 90 days.

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

FORMPIPE SOFTWARE AB  vs.  FORTEC ELEKTRONIK

FORMPIPE SOFTWARE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE and FORTEC ELEKTRONIK

The main advantage of trading using opposite FORMPIPE SOFTWARE and FORTEC ELEKTRONIK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.