Correlation Between FORTEC Elektronik and Anheuser Busch

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

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

Diversification Opportunities for FORTEC Elektronik and Anheuser Busch

-0.79

Correlation Coefficient

FORTEC Elektronik  Anheuser Busch

Pay attention - limited upside

The 3 months correlation between FORTEC and Anheuser is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC Elektronik AG and Anheuser Busch InBev SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch InBev 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 AG are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch InBev has no effect on the direction of FORTEC Elektronik i.e., FORTEC Elektronik and Anheuser Busch go up and down completely randomly.

Pair Corralation between FORTEC Elektronik and Anheuser Busch

Assuming the 90 days trading horizon FORTEC Elektronik AG is expected to under-perform the Anheuser Busch. In addition to that, FORTEC Elektronik is 2.6 times more volatile than Anheuser Busch InBev SANV. It trades about -0.01 of its total potential returns per unit of risk. Anheuser Busch InBev SANV is currently generating about 0.17 per unit of volatility. If you would invest  4,852  in Anheuser Busch InBev SANV on December 25, 2024 and sell it today you would earn a total of  852.00  from holding Anheuser Busch InBev SANV or generate 17.56% return on investment over 90 days.

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

FORTEC Elektronik AG  vs.  Anheuser Busch InBev SANV

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.

Anheuser Busch InBev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Anheuser Busch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORTEC Elektronik and Anheuser Busch

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

The idea behind FORTEC Elektronik AG and Anheuser Busch InBev SANV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.