Correlation Between Fair Isaac and AdCapital

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

By analyzing existing cross correlation between Fair Isaac Corp and AdCapital AG, you can compare the effects of market volatilities on Fair Isaac and AdCapital 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 Fair Isaac with a short position of AdCapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and AdCapital.

Diversification Opportunities for Fair Isaac and AdCapital

-0.81

Correlation Coefficient

Fair Isaac  AdCapital

Pay attention - limited upside

The 3 months correlation between Fair and AdCapital is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and AdCapital AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdCapital AG and Fair Isaac 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 Fair Isaac Corp are associated (or correlated) with AdCapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdCapital AG has no effect on the direction of Fair Isaac i.e., Fair Isaac and AdCapital go up and down completely randomly.

Pair Corralation between Fair Isaac and AdCapital

Assuming the 90 days trading horizon Fair Isaac Corp is expected to under-perform the AdCapital. But the stock apears to be less risky and, when comparing its historical volatility, Fair Isaac Corp is 1.4 times less risky than AdCapital. The stock trades about -0.27 of its potential returns per unit of risk. The AdCapital AG is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  222.00  in AdCapital AG on September 23, 2024 and sell it today you would lose (24.00) from holding AdCapital AG or give up 10.81% of portfolio value over 90 days.

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

Fair Isaac Corp  vs.  AdCapital AG

Fair Isaac Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fair Isaac unveiled solid returns over the last few months and may actually be approaching a breakup point.

AdCapital AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdCapital AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fair Isaac and AdCapital

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

The idea behind Fair Isaac Corp and AdCapital AG 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.