Correlation Between Foresight Environmental and Ocado Group

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

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

Diversification Opportunities for Foresight Environmental and Ocado Group

-0.5

Correlation Coefficient

Foresight Environmental  Ocado Group

Very good diversification

The 3 months correlation between Foresight and Ocado is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Foresight Environmental Infras and Ocado Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group PLC and Foresight Environmental 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 Foresight Environmental Infrastructure are associated (or correlated) with Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group PLC has no effect on the direction of Foresight Environmental i.e., Foresight Environmental and Ocado Group go up and down completely randomly.

Pair Corralation between Foresight Environmental and Ocado Group

Assuming the 90 days trading horizon Foresight Environmental Infrastructure is expected to generate 0.35 times more return on investment than Ocado Group. However, Foresight Environmental Infrastructure is 2.85 times less risky than Ocado Group. It trades about 0.04 of its potential returns per unit of risk. Ocado Group PLC is currently generating about -0.05 per unit of risk. If you would invest  6,952  in Foresight Environmental Infrastructure on December 24, 2024 and sell it today you would earn a total of  238.00  from holding Foresight Environmental Infrastructure or generate 3.42% return on investment over 90 days.

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

Foresight Environmental Infras  vs.  Ocado Group PLC

Foresight Environmental

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foresight Environmental Infrastructure are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Foresight Environmental is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ocado Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocado Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Foresight Environmental and Ocado Group

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

The idea behind Foresight Environmental Infrastructure and Ocado Group PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.