Correlation Between Future Generation and AMOTIV

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

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

Diversification Opportunities for Future Generation and AMOTIV

0.06

Correlation Coefficient

Future Generation  AMOTIV

Significant diversification

The 3 months correlation between Future and AMOTIV is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Future Generation Global and AMOTIV LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMOTIV LTD and Future Generation 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 Future Generation Global are associated (or correlated) with AMOTIV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMOTIV LTD has no effect on the direction of Future Generation i.e., Future Generation and AMOTIV go up and down completely randomly.

Pair Corralation between Future Generation and AMOTIV

Assuming the 90 days trading horizon Future Generation Global is expected to generate 0.53 times more return on investment than AMOTIV. However, Future Generation Global is 1.9 times less risky than AMOTIV. It trades about 0.1 of its potential returns per unit of risk. AMOTIV LTD is currently generating about 0.04 per unit of risk. If you would invest  128.00  in Future Generation Global on October 4, 2024 and sell it today you would earn a total of  14.00  from holding Future Generation Global or generate 10.94% return on investment over 90 days.

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

Future Generation Global  vs.  AMOTIV LTD

Future Generation Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Future Generation Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Future Generation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AMOTIV LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMOTIV LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AMOTIV may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Future Generation and AMOTIV

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

The idea behind Future Generation Global and AMOTIV LTD 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.