Correlation Between FORMPIPE SOFTWARE and GEELY AUTOMOBILE

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

Diversification Opportunities for FORMPIPE SOFTWARE and GEELY AUTOMOBILE

0.16

Correlation Coefficient

FORMPIPE SOFTWARE  GEELY AUTOMOBILE

Average diversification

The 3 months correlation between FORMPIPE and GEELY is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and GEELY AUTOMOBILE go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and GEELY AUTOMOBILE

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 1.16 times more return on investment than GEELY AUTOMOBILE. However, FORMPIPE SOFTWARE is 1.16 times more volatile than GEELY AUTOMOBILE. It trades about 0.09 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.04 per unit of risk. If you would invest  189.00  in FORMPIPE SOFTWARE AB on October 23, 2024 and sell it today you would earn a total of  28.00  from holding FORMPIPE SOFTWARE AB or generate 14.81% return on investment over 90 days.

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

FORMPIPE SOFTWARE AB  vs.  GEELY AUTOMOBILE

FORMPIPE SOFTWARE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORMPIPE SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

GEELY AUTOMOBILE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GEELY AUTOMOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FORMPIPE SOFTWARE and GEELY AUTOMOBILE

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

The idea behind FORMPIPE SOFTWARE AB and GEELY AUTOMOBILE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.