Correlation Between FORTEC ELEKTRONIK and FONIX MOBILE

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

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

Diversification Opportunities for FORTEC ELEKTRONIK and FONIX MOBILE

-0.34

Correlation Coefficient

FORTEC ELEKTRONIK  FONIX MOBILE

Very good diversification

The 3 months correlation between FORTEC and FONIX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC ELEKTRONIK and FONIX MOBILE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FONIX MOBILE PLC 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 FONIX MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FONIX MOBILE PLC has no effect on the direction of FORTEC ELEKTRONIK i.e., FORTEC ELEKTRONIK and FONIX MOBILE go up and down completely randomly.

Pair Corralation between FORTEC ELEKTRONIK and FONIX MOBILE

Assuming the 90 days trading horizon FORTEC ELEKTRONIK is expected to generate 1.05 times more return on investment than FONIX MOBILE. However, FORTEC ELEKTRONIK is 1.05 times more volatile than FONIX MOBILE PLC. It trades about 0.07 of its potential returns per unit of risk. FONIX MOBILE PLC is currently generating about -0.06 per unit of risk. If you would invest  1,860  in FORTEC ELEKTRONIK on October 10, 2024 and sell it today you would earn a total of  80.00  from holding FORTEC ELEKTRONIK or generate 4.3% 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.  FONIX MOBILE PLC

FORTEC ELEKTRONIK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FORTEC ELEKTRONIK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, FORTEC ELEKTRONIK is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

FONIX MOBILE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FONIX MOBILE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FONIX MOBILE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORTEC ELEKTRONIK and FONIX MOBILE

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

The idea behind FORTEC ELEKTRONIK and FONIX MOBILE PLC 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.