Correlation Between FINCORP INVESTMENT and ABC BANKING

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

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

Diversification Opportunities for FINCORP INVESTMENT and ABC BANKING

-0.13

Correlation Coefficient

FINCORP INVESTMENT  ABC BANKING

Good diversification

The 3 months correlation between FINCORP and ABC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding FINCORP INVESTMENT LTD and ABC BANKING PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC BANKING PORATION and FINCORP INVESTMENT 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 FINCORP INVESTMENT LTD are associated (or correlated) with ABC BANKING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC BANKING PORATION has no effect on the direction of FINCORP INVESTMENT i.e., FINCORP INVESTMENT and ABC BANKING go up and down completely randomly.

Pair Corralation between FINCORP INVESTMENT and ABC BANKING

Assuming the 90 days trading horizon FINCORP INVESTMENT LTD is expected to generate 2.76 times more return on investment than ABC BANKING. However, FINCORP INVESTMENT is 2.76 times more volatile than ABC BANKING PORATION. It trades about 0.07 of its potential returns per unit of risk. ABC BANKING PORATION is currently generating about -0.09 per unit of risk. If you would invest  1,780  in FINCORP INVESTMENT LTD on December 21, 2024 and sell it today you would earn a total of  120.00  from holding FINCORP INVESTMENT LTD or generate 6.74% return on investment over 90 days.

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

FINCORP INVESTMENT LTD  vs.  ABC BANKING PORATION

FINCORP INVESTMENT LTD

Risk-Adjusted Performance

Modest

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

ABC BANKING PORATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABC BANKING PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ABC BANKING is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FINCORP INVESTMENT and ABC BANKING

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

The idea behind FINCORP INVESTMENT LTD and ABC BANKING PORATION 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.