Correlation Between FOM Technologies and PARKEN Sport

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

Diversification Opportunities for FOM Technologies and PARKEN Sport

-0.68

Correlation Coefficient

FOM Technologies  PARKEN Sport

Excellent diversification

The 3 months correlation between FOM and PARKEN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of FOM Technologies i.e., FOM Technologies and PARKEN Sport go up and down completely randomly.

Pair Corralation between FOM Technologies and PARKEN Sport

Assuming the 90 days trading horizon FOM Technologies AS is expected to under-perform the PARKEN Sport. In addition to that, FOM Technologies is 2.31 times more volatile than PARKEN Sport Entertainment. It trades about -0.06 of its total potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.11 per unit of volatility. If you would invest  12,600  in PARKEN Sport Entertainment on December 21, 2024 and sell it today you would earn a total of  1,350  from holding PARKEN Sport Entertainment or generate 10.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

FOM Technologies AS  vs.  PARKEN Sport Entertainment

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.

PARKEN Sport Enterta

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, PARKEN Sport may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FOM Technologies and PARKEN Sport

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

The idea behind FOM Technologies AS and PARKEN Sport Entertainment 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.