Correlation Between Fortinet and Coheris SA

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

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

Diversification Opportunities for Fortinet and Coheris SA

0.41

Correlation Coefficient

Fortinet  Coheris SA

Very weak diversification

The 3 months correlation between Fortinet and Coheris is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Coheris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coheris SA and Fortinet 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 Fortinet are associated (or correlated) with Coheris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coheris SA has no effect on the direction of Fortinet i.e., Fortinet and Coheris SA go up and down completely randomly.

Pair Corralation between Fortinet and Coheris SA

Assuming the 90 days horizon Fortinet is expected to generate 0.79 times more return on investment than Coheris SA. However, Fortinet is 1.27 times less risky than Coheris SA. It trades about -0.01 of its potential returns per unit of risk. Coheris SA is currently generating about -0.02 per unit of risk. If you would invest  9,267  in Fortinet on December 22, 2024 and sell it today you would lose (175.00) from holding Fortinet or give up 1.89% of portfolio value over 90 days.

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

Fortinet  vs.  Coheris SA

Fortinet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortinet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fortinet is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Coheris SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coheris SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Coheris SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortinet and Coheris SA

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

The idea behind Fortinet and Coheris SA 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.