Correlation Between FORTEC ELEKTRONIK and MOVIE GAMES

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

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

Diversification Opportunities for FORTEC ELEKTRONIK and MOVIE GAMES

-0.18

Correlation Coefficient

FORTEC ELEKTRONIK  MOVIE GAMES

Good diversification

The 3 months correlation between FORTEC and MOVIE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC ELEKTRONIK and MOVIE GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOVIE GAMES SA and FORTEC ELEKTRONIK 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 FORTEC ELEKTRONIK are associated (or correlated) with MOVIE GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOVIE GAMES SA has no effect on the direction of FORTEC ELEKTRONIK i.e., FORTEC ELEKTRONIK and MOVIE GAMES go up and down completely randomly.

Pair Corralation between FORTEC ELEKTRONIK and MOVIE GAMES

Assuming the 90 days trading horizon FORTEC ELEKTRONIK is expected to generate 2.75 times less return on investment than MOVIE GAMES. But when comparing it to its historical volatility, FORTEC ELEKTRONIK is 3.29 times less risky than MOVIE GAMES. It trades about 0.22 of its potential returns per unit of risk. MOVIE GAMES SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  356.00  in MOVIE GAMES SA on October 27, 2024 and sell it today you would earn a total of  57.00  from holding MOVIE GAMES SA or generate 16.01% return on investment over 90 days.

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

FORTEC ELEKTRONIK   vs.  MOVIE GAMES SA

FORTEC ELEKTRONIK

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FORTEC ELEKTRONIK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FORTEC ELEKTRONIK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MOVIE GAMES SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOVIE GAMES SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MOVIE GAMES may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FORTEC ELEKTRONIK and MOVIE GAMES

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

The idea behind FORTEC ELEKTRONIK and MOVIE GAMES SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..