Correlation Between FOM Technologies and BioPorto

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

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

Diversification Opportunities for FOM Technologies and BioPorto

0.28

Correlation Coefficient

FOM Technologies  BioPorto

Modest diversification

The 3 months correlation between FOM and BioPorto is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and BioPorto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioPorto and FOM Technologies 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 FOM Technologies AS are associated (or correlated) with BioPorto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioPorto has no effect on the direction of FOM Technologies i.e., FOM Technologies and BioPorto go up and down completely randomly.

Pair Corralation between FOM Technologies and BioPorto

Assuming the 90 days trading horizon FOM Technologies AS is expected to generate 1.89 times more return on investment than BioPorto. However, FOM Technologies is 1.89 times more volatile than BioPorto. It trades about 0.02 of its potential returns per unit of risk. BioPorto is currently generating about -0.06 per unit of risk. If you would invest  824.00  in FOM Technologies AS on December 30, 2024 and sell it today you would lose (6.00) from holding FOM Technologies AS or give up 0.73% of portfolio value over 90 days.

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

FOM Technologies AS  vs.  BioPorto

FOM Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FOM Technologies AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, FOM Technologies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BioPorto

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioPorto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite 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 FOM Technologies and BioPorto

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

The idea behind FOM Technologies AS and BioPorto 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.