Correlation Between Flexible Solutions and 126408GX5

Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and 126408GX5 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 Flexible Solutions and 126408GX5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flexible Solutions International and CSX P 44, you can compare the effects of market volatilities on Flexible Solutions and 126408GX5 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 Flexible Solutions with a short position of 126408GX5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and 126408GX5.

Diversification Opportunities for Flexible Solutions and 126408GX5

0.39

Correlation Coefficient

Flexible Solutions  126408GX5

Weak diversification

The 3 months correlation between Flexible and 126408GX5 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and CSX P 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 126408GX5 and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with 126408GX5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 126408GX5 has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and 126408GX5 go up and down completely randomly.

Pair Corralation between Flexible Solutions and 126408GX5

Considering the 90-day investment horizon Flexible Solutions is expected to generate 21.54 times less return on investment than 126408GX5. But when comparing it to its historical volatility, Flexible Solutions International is 17.56 times less risky than 126408GX5. It trades about 0.05 of its potential returns per unit of risk. CSX P 44 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,200  in CSX P 44 on October 23, 2024 and sell it today you would earn a total of  516.00  from holding CSX P 44 or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.38%
Values	Daily Returns

Flexible Solutions Internation  vs.  CSX P 44

Flexible Solutions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Flexible Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

126408GX5

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSX P 44 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 126408GX5 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flexible Solutions and 126408GX5

The main advantage of trading using opposite Flexible Solutions and 126408GX5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, 126408GX5 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 126408GX5 will offset losses from the drop in 126408GX5's long position.

The idea behind Flexible Solutions International and CSX P 44 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.