Correlation Between FPT Digital and Sea Air

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

By analyzing existing cross correlation between FPT Digital Retail and Sea Air Freight, you can compare the effects of market volatilities on FPT Digital and Sea Air 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 FPT Digital with a short position of Sea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Digital and Sea Air.

Diversification Opportunities for FPT Digital and Sea Air

0.26

Correlation Coefficient

FPT Digital  Sea Air

Modest diversification

The 3 months correlation between FPT and Sea is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FPT Digital Retail and Sea Air Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Air Freight and FPT Digital 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 FPT Digital Retail are associated (or correlated) with Sea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Air Freight has no effect on the direction of FPT Digital i.e., FPT Digital and Sea Air go up and down completely randomly.

Pair Corralation between FPT Digital and Sea Air

Assuming the 90 days trading horizon FPT Digital Retail is expected to generate 1.19 times more return on investment than Sea Air. However, FPT Digital is 1.19 times more volatile than Sea Air Freight. It trades about 0.13 of its potential returns per unit of risk. Sea Air Freight is currently generating about 0.04 per unit of risk. If you would invest  5,722,059  in FPT Digital Retail on September 16, 2024 and sell it today you would earn a total of  12,467,941  from holding FPT Digital Retail or generate 217.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.94%
Values	Daily Returns

FPT Digital Retail  vs.  Sea Air Freight

FPT Digital Retail

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Digital Retail are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, FPT Digital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sea Air Freight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sea Air Freight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Sea Air is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FPT Digital and Sea Air

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

The idea behind FPT Digital Retail and Sea Air Freight 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.