Correlation Between FORTEC ELEKTRONIK and FORTEC Elektronik

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

By analyzing existing cross correlation between FORTEC ELEKTRONIK and FORTEC Elektronik AG, you can compare the effects of market volatilities on FORTEC ELEKTRONIK and FORTEC Elektronik 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 FORTEC Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORTEC ELEKTRONIK and FORTEC Elektronik.

Diversification Opportunities for FORTEC ELEKTRONIK and FORTEC Elektronik

0.98

Correlation Coefficient

FORTEC ELEKTRONIK  FORTEC Elektronik

Almost no diversification

The 3 months correlation between FORTEC and FORTEC is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC ELEKTRONIK and FORTEC Elektronik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTEC Elektronik 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 FORTEC Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTEC Elektronik has no effect on the direction of FORTEC ELEKTRONIK i.e., FORTEC ELEKTRONIK and FORTEC Elektronik go up and down completely randomly.

Pair Corralation between FORTEC ELEKTRONIK and FORTEC Elektronik

Assuming the 90 days trading horizon FORTEC ELEKTRONIK is expected to under-perform the FORTEC Elektronik. But the stock apears to be less risky and, when comparing its historical volatility, FORTEC ELEKTRONIK is 1.47 times less risky than FORTEC Elektronik. The stock trades about -0.04 of its potential returns per unit of risk. The FORTEC Elektronik AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,735  in FORTEC Elektronik AG on December 24, 2024 and sell it today you would lose (155.00) from holding FORTEC Elektronik AG or give up 8.93% of portfolio value over 90 days.

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

FORTEC ELEKTRONIK   vs.  FORTEC Elektronik AG

FORTEC ELEKTRONIK

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORTEC ELEKTRONIK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FORTEC Elektronik

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORTEC Elektronik AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FORTEC Elektronik is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FORTEC ELEKTRONIK and FORTEC Elektronik

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

The idea behind FORTEC ELEKTRONIK and FORTEC Elektronik AG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.