Correlation Between FORTEC Elektronik and INNELEC MULTIMMINHEO153

Can any of the company-specific risk be diversified away by investing in both FORTEC Elektronik and INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153, you can compare the effects of market volatilities on FORTEC Elektronik and INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORTEC Elektronik and INNELEC MULTIMMINHEO153.

Diversification Opportunities for FORTEC Elektronik and INNELEC MULTIMMINHEO153

0.27

Correlation Coefficient

FORTEC Elektronik  INNELEC MULTIMMINHEO153

Modest diversification

The 3 months correlation between FORTEC and INNELEC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC Elektronik AG and INNELEC MULTIMMINHEO153 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNELEC MULTIMMINHEO153 has no effect on the direction of FORTEC Elektronik i.e., FORTEC Elektronik and INNELEC MULTIMMINHEO153 go up and down completely randomly.

Pair Corralation between FORTEC Elektronik and INNELEC MULTIMMINHEO153

Assuming the 90 days trading horizon FORTEC Elektronik AG is expected to under-perform the INNELEC MULTIMMINHEO153. But the stock apears to be less risky and, when comparing its historical volatility, FORTEC Elektronik AG is 3.09 times less risky than INNELEC MULTIMMINHEO153. The stock trades about -0.07 of its potential returns per unit of risk. The INNELEC MULTIMMINHEO153 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  300.00  in INNELEC MULTIMMINHEO153 on September 23, 2024 and sell it today you would earn a total of  13.00  from holding INNELEC MULTIMMINHEO153 or generate 4.33% return on investment over 90 days.

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

FORTEC Elektronik AG  vs.  INNELEC MULTIMMINHEO153

FORTEC Elektronik

Risk-Adjusted Performance

0 of 100

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.

INNELEC MULTIMMINHEO153

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INNELEC MULTIMMINHEO153 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FORTEC Elektronik and INNELEC MULTIMMINHEO153

The main advantage of trading using opposite FORTEC Elektronik and INNELEC MULTIMMINHEO153 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORTEC Elektronik position performs unexpectedly, INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153 will offset losses from the drop in INNELEC MULTIMMINHEO153's long position.

The idea behind FORTEC Elektronik AG and INNELEC MULTIMMINHEO153 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.