Correlation Between FOM Technologies and Cessatech

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

Diversification Opportunities for FOM Technologies and Cessatech

0.53

Correlation Coefficient

FOM Technologies  Cessatech

Very weak diversification

The 3 months correlation between FOM and Cessatech is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and Cessatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cessatech AS 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 Cessatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cessatech AS has no effect on the direction of FOM Technologies i.e., FOM Technologies and Cessatech go up and down completely randomly.

Pair Corralation between FOM Technologies and Cessatech

Assuming the 90 days trading horizon FOM Technologies AS is expected to generate 1.07 times more return on investment than Cessatech. However, FOM Technologies is 1.07 times more volatile than Cessatech AS. It trades about -0.06 of its potential returns per unit of risk. Cessatech AS is currently generating about -0.11 per unit of risk. If you would invest  860.00  in FOM Technologies AS on December 22, 2024 and sell it today you would lose (152.00) from holding FOM Technologies AS or give up 17.67% of portfolio value over 90 days.

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

FOM Technologies AS  vs.  Cessatech AS

FOM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days FOM Technologies AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cessatech AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with FOM Technologies and Cessatech

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

The idea behind FOM Technologies AS and Cessatech AS 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 CEOs Directory module to screen CEOs from public companies around the world.