Correlation Between Fastbase and IPE Universal

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

By analyzing existing cross correlation between Fastbase and IPE Universal, you can compare the effects of market volatilities on Fastbase and IPE Universal 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 Fastbase with a short position of IPE Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastbase and IPE Universal.

Diversification Opportunities for Fastbase and IPE Universal

0.09

Correlation Coefficient

Fastbase  IPE Universal

Significant diversification

The 3 months correlation between Fastbase and IPE is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fastbase and IPE Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPE Universal and Fastbase 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 Fastbase are associated (or correlated) with IPE Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPE Universal has no effect on the direction of Fastbase i.e., Fastbase and IPE Universal go up and down completely randomly.

Pair Corralation between Fastbase and IPE Universal

Given the investment horizon of 90 days Fastbase is expected to generate 5.02 times more return on investment than IPE Universal. However, Fastbase is 5.02 times more volatile than IPE Universal. It trades about 0.07 of its potential returns per unit of risk. IPE Universal is currently generating about -0.09 per unit of risk. If you would invest  210.00  in Fastbase on October 12, 2024 and sell it today you would lose (80.00) from holding Fastbase or give up 38.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Fastbase  vs.  IPE Universal

Fastbase

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fastbase are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fastbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

IPE Universal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IPE Universal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fastbase and IPE Universal

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

The idea behind Fastbase and IPE Universal 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.