Correlation Between FFSG and FFHG

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

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

Diversification Opportunities for FFSG and FFHG

0.99

Correlation Coefficient

FFSG  FFHG

No risk reduction

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

Pair Corralation between FFSG and FFHG

If you would invest  3,349  in FFHG on September 5, 2024 and sell it today you would earn a total of  0.00  from holding FFHG 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

FFSG  vs.  FFHG

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.

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.

Pair Trading with FFSG and FFHG

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

The idea behind FFSG and FFHG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.