Correlation Between FORMPIPE SOFTWARE and FLOW TRADERS

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

Diversification Opportunities for FORMPIPE SOFTWARE and FLOW TRADERS

0.03

Correlation Coefficient

FORMPIPE SOFTWARE  FLOW TRADERS

Significant diversification

The 3 months correlation between FORMPIPE and FLOW is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and FLOW TRADERS go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and FLOW TRADERS

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to under-perform the FLOW TRADERS. In addition to that, FORMPIPE SOFTWARE is 2.09 times more volatile than FLOW TRADERS LTD. It trades about -0.01 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.05 per unit of volatility. If you would invest  2,072  in FLOW TRADERS LTD on October 6, 2024 and sell it today you would earn a total of  80.00  from holding FLOW TRADERS LTD or generate 3.86% 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.  FLOW TRADERS LTD

FORMPIPE SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORMPIPE SOFTWARE AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORMPIPE SOFTWARE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

FLOW TRADERS LTD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FLOW TRADERS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORMPIPE SOFTWARE and FLOW TRADERS

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

The idea behind FORMPIPE SOFTWARE AB and FLOW TRADERS LTD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.