Correlation Between FORTEC Elektronik and Wayside Technology

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

Diversification Opportunities for FORTEC Elektronik and Wayside Technology

0.01

Correlation Coefficient

FORTEC Elektronik  Wayside Technology

Significant diversification

The 3 months correlation between FORTEC and Wayside is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding FORTEC Elektronik AG and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology 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 Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of FORTEC Elektronik i.e., FORTEC Elektronik and Wayside Technology go up and down completely randomly.

Pair Corralation between FORTEC Elektronik and Wayside Technology

Assuming the 90 days trading horizon FORTEC Elektronik AG is expected to generate 0.44 times more return on investment than Wayside Technology. However, FORTEC Elektronik AG is 2.27 times less risky than Wayside Technology. It trades about -0.07 of its potential returns per unit of risk. Wayside Technology Group is currently generating about -0.07 per unit of risk. If you would invest  1,870  in FORTEC Elektronik AG on September 23, 2024 and sell it today you would lose (50.00) from holding FORTEC Elektronik AG or give up 2.67% of portfolio value over 90 days.

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

FORTEC Elektronik AG  vs.  Wayside Technology Group

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.

Wayside Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wayside Technology Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wayside Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORTEC Elektronik and Wayside Technology

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

The idea behind FORTEC Elektronik AG and Wayside Technology Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.