Correlation Between FOM Technologies and Carnegie Wealth

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

Diversification Opportunities for FOM Technologies and Carnegie Wealth

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between FOM and Carnegie is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and Carnegie Wealth Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Wealth Mana 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 Carnegie Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Wealth Mana has no effect on the direction of FOM Technologies i.e., FOM Technologies and Carnegie Wealth go up and down completely randomly.

Pair Corralation between FOM Technologies and Carnegie Wealth

Assuming the 90 days trading horizon FOM Technologies AS is expected to under-perform the Carnegie Wealth. In addition to that, FOM Technologies is 3.23 times more volatile than Carnegie Wealth Management. It trades about -0.27 of its total potential returns per unit of risk. Carnegie Wealth Management is currently generating about -0.15 per unit of volatility. If you would invest  12,995  in Carnegie Wealth Management on October 11, 2024 and sell it today you would lose (450.00) from holding Carnegie Wealth Management or give up 3.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FOM Technologies AS  vs.  Carnegie Wealth Management

 Performance 
       Timeline  
FOM Technologies 

Risk-Adjusted Performance

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Strong
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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Carnegie Wealth Mana 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Carnegie Wealth Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Carnegie Wealth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

FOM Technologies and Carnegie Wealth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FOM Technologies and Carnegie Wealth

The main advantage of trading using opposite FOM Technologies and Carnegie Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOM Technologies position performs unexpectedly, Carnegie Wealth 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 Carnegie Wealth will offset losses from the drop in Carnegie Wealth's long position.
The idea behind FOM Technologies AS and Carnegie Wealth Management 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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