Correlation Between Fair Oaks and Made Tech

Can any of the company-specific risk be diversified away by investing in both Fair Oaks and Made Tech 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 Fair Oaks and Made Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fair Oaks Income and Made Tech Group, you can compare the effects of market volatilities on Fair Oaks and Made Tech 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 Fair Oaks with a short position of Made Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Made Tech.

Diversification Opportunities for Fair Oaks and Made Tech

0.79

Correlation Coefficient

Fair Oaks  Made Tech

Poor diversification

The 3 months correlation between Fair and Made is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Made Tech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Made Tech Group and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with Made Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Made Tech Group has no effect on the direction of Fair Oaks i.e., Fair Oaks and Made Tech go up and down completely randomly.

Pair Corralation between Fair Oaks and Made Tech

Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.54 times more return on investment than Made Tech. However, Fair Oaks Income is 1.85 times less risky than Made Tech. It trades about 0.19 of its potential returns per unit of risk. Made Tech Group is currently generating about 0.01 per unit of risk. If you would invest  54.00  in Fair Oaks Income on October 24, 2024 and sell it today you would earn a total of  2.00  from holding Fair Oaks Income or generate 3.7% return on investment over 90 days.

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

Fair Oaks Income  vs.  Made Tech Group

Fair Oaks Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Oaks Income are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fair Oaks may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Made Tech Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Oaks and Made Tech

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

The idea behind Fair Oaks Income and Made Tech Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.