Correlation Between FLFR and FLEH

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

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

Diversification Opportunities for FLFR and FLEH

0.0

Correlation Coefficient

FLFR  FLEH

Pay attention - limited upside

The 3 months correlation between FLFR and FLEH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FLFR and FLEH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEH and FLFR 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 FLFR are associated (or correlated) with FLEH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEH has no effect on the direction of FLFR i.e., FLFR and FLEH go up and down completely randomly.

Pair Corralation between FLFR and FLEH

If you would invest (100.00) in FLEH on December 2, 2024 and sell it today you would earn a total of  100.00  from holding FLEH or generate -100.0% return on investment over 90 days.

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

FLFR  vs.  FLEH

FLFR

Risk-Adjusted Performance

Very Weak

Over the last 90 days FLFR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, FLFR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

FLEH

Risk-Adjusted Performance

Very Weak

Over the last 90 days FLEH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, FLEH is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FLFR and FLEH

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

The idea behind FLFR and FLEH 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.