Correlation Between Fonix Mobile and Baker Steel

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

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

Diversification Opportunities for Fonix Mobile and Baker Steel

-0.63

Correlation Coefficient

Fonix Mobile  Baker Steel

Excellent diversification

The 3 months correlation between Fonix and Baker is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fonix Mobile plc and Baker Steel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Steel Resources and Fonix Mobile 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 Fonix Mobile plc are associated (or correlated) with Baker Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Steel Resources has no effect on the direction of Fonix Mobile i.e., Fonix Mobile and Baker Steel go up and down completely randomly.

Pair Corralation between Fonix Mobile and Baker Steel

Assuming the 90 days trading horizon Fonix Mobile plc is expected to under-perform the Baker Steel. In addition to that, Fonix Mobile is 1.34 times more volatile than Baker Steel Resources. It trades about -0.07 of its total potential returns per unit of risk. Baker Steel Resources is currently generating about 0.17 per unit of volatility. If you would invest  4,700  in Baker Steel Resources on September 13, 2024 and sell it today you would earn a total of  1,100  from holding Baker Steel Resources or generate 23.4% return on investment over 90 days.

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

Fonix Mobile plc  vs.  Baker Steel Resources

Fonix Mobile plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonix Mobile plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Baker Steel Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Steel Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baker Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fonix Mobile and Baker Steel

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

The idea behind Fonix Mobile plc and Baker Steel Resources 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.