Correlation Between FOM Technologies and ChemoMetec

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

Diversification Opportunities for FOM Technologies and ChemoMetec

-0.7

Correlation Coefficient

FOM Technologies  ChemoMetec

Excellent diversification

The 3 months correlation between FOM and ChemoMetec is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and ChemoMetec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChemoMetec 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 ChemoMetec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChemoMetec AS has no effect on the direction of FOM Technologies i.e., FOM Technologies and ChemoMetec go up and down completely randomly.

Pair Corralation between FOM Technologies and ChemoMetec

Assuming the 90 days trading horizon FOM Technologies is expected to generate 1.26 times less return on investment than ChemoMetec. In addition to that, FOM Technologies is 1.68 times more volatile than ChemoMetec AS. It trades about 0.02 of its total potential returns per unit of risk. ChemoMetec AS is currently generating about 0.04 per unit of volatility. If you would invest  48,620  in ChemoMetec AS on December 30, 2024 and sell it today you would earn a total of  2,380  from holding ChemoMetec AS or generate 4.9% return on investment over 90 days.

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

FOM Technologies AS  vs.  ChemoMetec AS

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.

ChemoMetec AS

Risk-Adjusted Performance

Insignificant

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

Pair Trading with FOM Technologies and ChemoMetec

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

The idea behind FOM Technologies AS and ChemoMetec 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..