Correlation Between Filinvest Development and Now Corp

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

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

Diversification Opportunities for Filinvest Development and Now Corp

0.46

Correlation Coefficient

Filinvest Development  Now Corp

Very weak diversification

The 3 months correlation between Filinvest and Now is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Filinvest Development Coprorat and Now Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Corp and Filinvest Development 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 Filinvest Development Coproration are associated (or correlated) with Now Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Corp has no effect on the direction of Filinvest Development i.e., Filinvest Development and Now Corp go up and down completely randomly.

Pair Corralation between Filinvest Development and Now Corp

Assuming the 90 days trading horizon Filinvest Development Coproration is expected to under-perform the Now Corp. But the stock apears to be less risky and, when comparing its historical volatility, Filinvest Development Coproration is 18.41 times less risky than Now Corp. The stock trades about -0.28 of its potential returns per unit of risk. The Now Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Now Corp on October 22, 2024 and sell it today you would earn a total of  4.00  from holding Now Corp or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.25%
Values	Daily Returns

Filinvest Development Coprorat  vs.  Now Corp

Filinvest Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Filinvest Development Coproration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Now Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Now Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Filinvest Development and Now Corp

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

The idea behind Filinvest Development Coproration and Now Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.