Correlation Between FormPipe Software and NOTE AB

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

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

Diversification Opportunities for FormPipe Software and NOTE AB

0.37

Correlation Coefficient

FormPipe Software  NOTE AB

Weak diversification

The 3 months correlation between FormPipe and NOTE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and NOTE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOTE AB and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with NOTE AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOTE AB has no effect on the direction of FormPipe Software i.e., FormPipe Software and NOTE AB go up and down completely randomly.

Pair Corralation between FormPipe Software and NOTE AB

Assuming the 90 days trading horizon FormPipe Software is expected to generate 1.09 times less return on investment than NOTE AB. In addition to that, FormPipe Software is 1.49 times more volatile than NOTE AB. It trades about 0.09 of its total potential returns per unit of risk. NOTE AB is currently generating about 0.15 per unit of volatility. If you would invest  14,800  in NOTE AB on December 30, 2024 and sell it today you would earn a total of  2,490  from holding NOTE AB or generate 16.82% return on investment over 90 days.

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

FormPipe Software AB  vs.  NOTE AB

FormPipe Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FormPipe Software AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FormPipe Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

NOTE AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NOTE AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FormPipe Software and NOTE AB

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

The idea behind FormPipe Software AB and NOTE AB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.