Correlation Between FGI Industries and Flexsteel Industries

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

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

Diversification Opportunities for FGI Industries and Flexsteel Industries

0.17

Correlation Coefficient

FGI Industries  Flexsteel Industries

Average diversification

The 3 months correlation between FGI and Flexsteel is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FGI Industries and Flexsteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexsteel Industries and FGI Industries 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 FGI Industries are associated (or correlated) with Flexsteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexsteel Industries has no effect on the direction of FGI Industries i.e., FGI Industries and Flexsteel Industries go up and down completely randomly.

Pair Corralation between FGI Industries and Flexsteel Industries

Considering the 90-day investment horizon FGI Industries is expected to generate 0.81 times more return on investment than Flexsteel Industries. However, FGI Industries is 1.24 times less risky than Flexsteel Industries. It trades about 0.02 of its potential returns per unit of risk. Flexsteel Industries is currently generating about -0.1 per unit of risk. If you would invest  80.00  in FGI Industries on December 28, 2024 and sell it today you would earn a total of  1.01  from holding FGI Industries or generate 1.26% return on investment over 90 days.

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

FGI Industries  vs.  Flexsteel Industries

FGI Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FGI Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, FGI Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Flexsteel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flexsteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with FGI Industries and Flexsteel Industries

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

The idea behind FGI Industries and Flexsteel Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.