Correlation Between FORMPIPE SOFTWARE and BJs Restaurants

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

Diversification Opportunities for FORMPIPE SOFTWARE and BJs Restaurants

0.37

Correlation Coefficient

FORMPIPE SOFTWARE  BJs Restaurants

Weak diversification

The 3 months correlation between FORMPIPE and BJs is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and BJs Restaurants go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and BJs Restaurants

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 0.89 times more return on investment than BJs Restaurants. However, FORMPIPE SOFTWARE AB is 1.12 times less risky than BJs Restaurants. It trades about 0.05 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.02 per unit of risk. If you would invest  144.00  in FORMPIPE SOFTWARE AB on October 13, 2024 and sell it today you would earn a total of  83.00  from holding FORMPIPE SOFTWARE AB or generate 57.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

FORMPIPE SOFTWARE AB  vs.  BJs Restaurants

FORMPIPE SOFTWARE

Risk-Adjusted Performance

6 of 100

OK

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 fragile basic indicators, FORMPIPE SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

BJs Restaurants

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BJs Restaurants may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FORMPIPE SOFTWARE and BJs Restaurants

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

The idea behind FORMPIPE SOFTWARE AB and BJs Restaurants 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.