Correlation Between Fateh Sports and Soneri Bank

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

By analyzing existing cross correlation between Fateh Sports Wear and Soneri Bank, you can compare the effects of market volatilities on Fateh Sports and Soneri Bank 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 Fateh Sports with a short position of Soneri Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fateh Sports and Soneri Bank.

Diversification Opportunities for Fateh Sports and Soneri Bank

0.1

Correlation Coefficient

Fateh Sports  Soneri Bank

Average diversification

The 3 months correlation between Fateh and Soneri is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fateh Sports Wear and Soneri Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soneri Bank and Fateh Sports 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 Fateh Sports Wear are associated (or correlated) with Soneri Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soneri Bank has no effect on the direction of Fateh Sports i.e., Fateh Sports and Soneri Bank go up and down completely randomly.

Pair Corralation between Fateh Sports and Soneri Bank

Assuming the 90 days trading horizon Fateh Sports Wear is expected to under-perform the Soneri Bank. In addition to that, Fateh Sports is 1.48 times more volatile than Soneri Bank. It trades about -0.3 of its total potential returns per unit of risk. Soneri Bank is currently generating about 0.19 per unit of volatility. If you would invest  1,706  in Soneri Bank on October 23, 2024 and sell it today you would earn a total of  121.00  from holding Soneri Bank or generate 7.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	57.89%
Values	Daily Returns

Fateh Sports Wear  vs.  Soneri Bank

Fateh Sports Wear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Soneri Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Soneri Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soneri Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fateh Sports and Soneri Bank

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

The idea behind Fateh Sports Wear and Soneri Bank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.