Correlation Between Fingerprint Cards and Absolent Group

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

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

Diversification Opportunities for Fingerprint Cards and Absolent Group

0.69

Correlation Coefficient

Fingerprint Cards  Absolent Group

Poor diversification

The 3 months correlation between Fingerprint and Absolent is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fingerprint Cards AB and Absolent Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolent Group AB and Fingerprint Cards 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 Fingerprint Cards AB are associated (or correlated) with Absolent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolent Group AB has no effect on the direction of Fingerprint Cards i.e., Fingerprint Cards and Absolent Group go up and down completely randomly.

Pair Corralation between Fingerprint Cards and Absolent Group

Assuming the 90 days trading horizon Fingerprint Cards AB is expected to under-perform the Absolent Group. In addition to that, Fingerprint Cards is 5.48 times more volatile than Absolent Group AB. It trades about -0.05 of its total potential returns per unit of risk. Absolent Group AB is currently generating about -0.17 per unit of volatility. If you would invest  37,300  in Absolent Group AB on September 22, 2024 and sell it today you would lose (12,200) from holding Absolent Group AB or give up 32.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.24%
Values	Daily Returns

Fingerprint Cards AB  vs.  Absolent Group AB

Fingerprint Cards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fingerprint Cards AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fingerprint Cards is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolent Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolent Group AB 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fingerprint Cards and Absolent Group

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

The idea behind Fingerprint Cards AB and Absolent Group AB 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.