Correlation Between FIPP SA and Crosswood

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

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

Diversification Opportunities for FIPP SA and Crosswood

-0.38

Correlation Coefficient

FIPP SA  Crosswood

Very good diversification

The 3 months correlation between FIPP and Crosswood is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding FIPP SA and Crosswood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crosswood and FIPP SA 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 FIPP SA are associated (or correlated) with Crosswood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crosswood has no effect on the direction of FIPP SA i.e., FIPP SA and Crosswood go up and down completely randomly.

Pair Corralation between FIPP SA and Crosswood

Assuming the 90 days trading horizon FIPP SA is expected to under-perform the Crosswood. In addition to that, FIPP SA is 2.95 times more volatile than Crosswood. It trades about -0.05 of its total potential returns per unit of risk. Crosswood is currently generating about 0.29 per unit of volatility. If you would invest  900.00  in Crosswood on October 10, 2024 and sell it today you would earn a total of  150.00  from holding Crosswood or generate 16.67% return on investment over 90 days.

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

FIPP SA  vs.  Crosswood

FIPP SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIPP SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Crosswood

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crosswood are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Crosswood may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FIPP SA and Crosswood

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

The idea behind FIPP SA and Crosswood 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 Transaction History module to view history of all your transactions and understand their impact on performance.