Correlation Between LB Foster and DEUTSCHE

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

By analyzing existing cross correlation between LB Foster and DEUTSCHE TELEKOM INTL, you can compare the effects of market volatilities on LB Foster and DEUTSCHE 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 LB Foster with a short position of DEUTSCHE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and DEUTSCHE.

Diversification Opportunities for LB Foster and DEUTSCHE

0.0

Correlation Coefficient

LB Foster  DEUTSCHE

Pay attention - limited upside

The 3 months correlation between FSTR and DEUTSCHE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and DEUTSCHE TELEKOM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE TELEKOM INTL and LB Foster 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 LB Foster are associated (or correlated) with DEUTSCHE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE TELEKOM INTL has no effect on the direction of LB Foster i.e., LB Foster and DEUTSCHE go up and down completely randomly.

Pair Corralation between LB Foster and DEUTSCHE

If you would invest  1,903  in LB Foster on October 10, 2024 and sell it today you would earn a total of  743.00  from holding LB Foster or generate 39.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LB Foster  vs.  DEUTSCHE TELEKOM INTL

LB Foster

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

DEUTSCHE TELEKOM INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE TELEKOM INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DEUTSCHE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LB Foster and DEUTSCHE

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

The idea behind LB Foster and DEUTSCHE TELEKOM INTL 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.