Correlation Between FFHG and FFSG

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

By analyzing existing cross correlation between FFHG and FFSG, you can compare the effects of market volatilities on FFHG and FFSG 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 FFHG with a short position of FFSG. Check out your portfolio center. Please also check ongoing floating volatility patterns of FFHG and FFSG.

Diversification Opportunities for FFHG and FFSG

0.99

Correlation Coefficient

FFHG  FFSG

No risk reduction

The 3 months correlation between FFHG and FFSG is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding FFHG and FFSG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFSG and FFHG 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 FFHG are associated (or correlated) with FFSG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFSG has no effect on the direction of FFHG i.e., FFHG and FFSG go up and down completely randomly.

Pair Corralation between FFHG and FFSG

If you would invest  3,321  in FFSG on September 5, 2024 and sell it today you would earn a total of  0.00  from holding FFSG or generate 0.0% return on investment over 90 days.

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

FFHG  vs.  FFSG

FFHG

Risk-Adjusted Performance

0 of 100

Very Weak

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

FFSG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FFHG and FFSG

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

The idea behind FFHG and FFSG 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.