Correlation Between Frequency Electronics and Minim

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

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

Diversification Opportunities for Frequency Electronics and Minim

-0.07

Correlation Coefficient

Frequency Electronics  Minim

Good diversification

The 3 months correlation between Frequency and Minim is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and Minim Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minim Inc and Frequency Electronics 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 Frequency Electronics are associated (or correlated) with Minim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minim Inc has no effect on the direction of Frequency Electronics i.e., Frequency Electronics and Minim go up and down completely randomly.

Pair Corralation between Frequency Electronics and Minim

Given the investment horizon of 90 days Frequency Electronics is expected to generate 4.56 times less return on investment than Minim. But when comparing it to its historical volatility, Frequency Electronics is 8.71 times less risky than Minim. It trades about 0.09 of its potential returns per unit of risk. Minim Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  439.00  in Minim Inc on September 1, 2024 and sell it today you would lose (178.00) from holding Minim Inc or give up 40.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.08%
Values	Daily Returns

Frequency Electronics  vs.  Minim Inc

Frequency Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Frequency Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Frequency Electronics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Minim Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minim Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Minim is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Frequency Electronics and Minim

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

The idea behind Frequency Electronics and Minim Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.