Correlation Between Fonix Mobile and Dotdigital Group

Can any of the company-specific risk be diversified away by investing in both Fonix Mobile and Dotdigital Group 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 Dotdigital Group 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 Dotdigital Group Plc, you can compare the effects of market volatilities on Fonix Mobile and Dotdigital Group 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 Dotdigital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fonix Mobile and Dotdigital Group.

Diversification Opportunities for Fonix Mobile and Dotdigital Group

0.06

Correlation Coefficient

Fonix Mobile  Dotdigital Group

Significant diversification

The 3 months correlation between Fonix and Dotdigital is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fonix Mobile plc and Dotdigital Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dotdigital Group Plc 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 Dotdigital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dotdigital Group Plc has no effect on the direction of Fonix Mobile i.e., Fonix Mobile and Dotdigital Group go up and down completely randomly.

Pair Corralation between Fonix Mobile and Dotdigital Group

Assuming the 90 days trading horizon Fonix Mobile plc is expected to generate 1.04 times more return on investment than Dotdigital Group. However, Fonix Mobile is 1.04 times more volatile than Dotdigital Group Plc. It trades about 0.08 of its potential returns per unit of risk. Dotdigital Group Plc is currently generating about -0.22 per unit of risk. If you would invest  21,850  in Fonix Mobile plc on December 1, 2024 and sell it today you would earn a total of  850.00  from holding Fonix Mobile plc or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Fonix Mobile plc  vs.  Dotdigital Group Plc

Fonix Mobile plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fonix Mobile plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Fonix Mobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dotdigital Group Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dotdigital Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fonix Mobile and Dotdigital Group

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

The idea behind Fonix Mobile plc and Dotdigital Group Plc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.