Correlation Between Fenbo Holdings and Peloton Interactive

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

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

Diversification Opportunities for Fenbo Holdings and Peloton Interactive

0.12

Correlation Coefficient

Fenbo Holdings  Peloton Interactive

Average diversification

The 3 months correlation between Fenbo and Peloton is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fenbo Holdings Limited and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive and Fenbo Holdings 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 Fenbo Holdings Limited are associated (or correlated) with Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Fenbo Holdings i.e., Fenbo Holdings and Peloton Interactive go up and down completely randomly.

Pair Corralation between Fenbo Holdings and Peloton Interactive

Given the investment horizon of 90 days Fenbo Holdings is expected to generate 5.23 times less return on investment than Peloton Interactive. In addition to that, Fenbo Holdings is 1.68 times more volatile than Peloton Interactive. It trades about 0.0 of its total potential returns per unit of risk. Peloton Interactive is currently generating about 0.01 per unit of volatility. If you would invest  1,274  in Peloton Interactive on November 28, 2024 and sell it today you would lose (429.00) from holding Peloton Interactive or give up 33.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	62.68%
Values	Daily Returns

Fenbo Holdings Limited  vs.  Peloton Interactive

Fenbo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fenbo Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Peloton Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peloton Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fenbo Holdings and Peloton Interactive

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

The idea behind Fenbo Holdings Limited and Peloton Interactive 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.