Correlation Between FIT INVEST and Southern Rubber

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

By analyzing existing cross correlation between FIT INVEST JSC and Southern Rubber Industry, you can compare the effects of market volatilities on FIT INVEST and Southern Rubber 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 FIT INVEST with a short position of Southern Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and Southern Rubber.

Diversification Opportunities for FIT INVEST and Southern Rubber

-0.2

Correlation Coefficient

FIT INVEST  Southern Rubber

Good diversification

The 3 months correlation between FIT and Southern is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and Southern Rubber Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Rubber Industry and FIT INVEST 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 FIT INVEST JSC are associated (or correlated) with Southern Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Rubber Industry has no effect on the direction of FIT INVEST i.e., FIT INVEST and Southern Rubber go up and down completely randomly.

Pair Corralation between FIT INVEST and Southern Rubber

Assuming the 90 days trading horizon FIT INVEST JSC is expected to generate 0.54 times more return on investment than Southern Rubber. However, FIT INVEST JSC is 1.84 times less risky than Southern Rubber. It trades about 0.14 of its potential returns per unit of risk. Southern Rubber Industry is currently generating about -0.06 per unit of risk. If you would invest  421,000  in FIT INVEST JSC on December 29, 2024 and sell it today you would earn a total of  44,000  from holding FIT INVEST JSC or generate 10.45% return on investment over 90 days.

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

FIT INVEST JSC  vs.  Southern Rubber Industry

FIT INVEST JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FIT INVEST may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Southern Rubber Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Rubber Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FIT INVEST and Southern Rubber

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

The idea behind FIT INVEST JSC and Southern Rubber Industry 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.