Correlation Between Fobi AI and Barloworld

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

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

Diversification Opportunities for Fobi AI and Barloworld

0.0

Correlation Coefficient

Fobi AI  Barloworld

Pay attention - limited upside

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

Pair Corralation between Fobi AI and Barloworld

If you would invest  4.00  in Fobi AI on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Fobi AI or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

Fobi AI  vs.  Barloworld Ltd ADR

Fobi AI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fobi AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, Fobi AI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fobi AI and Barloworld

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

The idea behind Fobi AI and Barloworld Ltd ADR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.