Correlation Between FC Investment and Octopus Aim

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

By analyzing existing cross correlation between FC Investment Trust and Octopus Aim Vct, you can compare the effects of market volatilities on FC Investment and Octopus Aim 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 FC Investment with a short position of Octopus Aim. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Octopus Aim.

Diversification Opportunities for FC Investment and Octopus Aim

0.06

Correlation Coefficient

FC Investment  Octopus Aim

Significant diversification

The 3 months correlation between FCIT and Octopus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Octopus Aim Vct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octopus Aim Vct and FC Investment 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 FC Investment Trust are associated (or correlated) with Octopus Aim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octopus Aim Vct has no effect on the direction of FC Investment i.e., FC Investment and Octopus Aim go up and down completely randomly.

Pair Corralation between FC Investment and Octopus Aim

Assuming the 90 days trading horizon FC Investment Trust is expected to generate 1.56 times more return on investment than Octopus Aim. However, FC Investment is 1.56 times more volatile than Octopus Aim Vct. It trades about 0.27 of its potential returns per unit of risk. Octopus Aim Vct is currently generating about -0.05 per unit of risk. If you would invest  105,456  in FC Investment Trust on October 25, 2024 and sell it today you would earn a total of  13,744  from holding FC Investment Trust or generate 13.03% return on investment over 90 days.

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

FC Investment Trust  vs.  Octopus Aim Vct

FC Investment Trust

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FC Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Octopus Aim Vct

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Octopus Aim Vct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Octopus Aim is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FC Investment and Octopus Aim

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

The idea behind FC Investment Trust and Octopus Aim Vct 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.