Correlation Between FLJ and Innovative Food

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

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

Diversification Opportunities for FLJ and Innovative Food

0.4

Correlation Coefficient

FLJ  Innovative Food

Very weak diversification

The 3 months correlation between FLJ and Innovative is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding FLJ Group and Innovative Food Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Food Hldg and FLJ 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 FLJ Group are associated (or correlated) with Innovative Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Food Hldg has no effect on the direction of FLJ i.e., FLJ and Innovative Food go up and down completely randomly.

Pair Corralation between FLJ and Innovative Food

If you would invest  135.00  in Innovative Food Hldg on September 3, 2024 and sell it today you would earn a total of  35.00  from holding Innovative Food Hldg or generate 25.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

FLJ Group  vs.  Innovative Food Hldg

FLJ Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLJ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady essential indicators, FLJ is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Innovative Food Hldg

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Food Hldg are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Innovative Food demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FLJ and Innovative Food

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

The idea behind FLJ Group and Innovative Food Hldg 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.