Correlation Between Futuretech and Cirmaker Technology

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

By analyzing existing cross correlation between Futuretech II Acquisition and Cirmaker Technology, you can compare the effects of market volatilities on Futuretech and Cirmaker Technology 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 Futuretech with a short position of Cirmaker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuretech and Cirmaker Technology.

Diversification Opportunities for Futuretech and Cirmaker Technology

0.46

Correlation Coefficient

Futuretech  Cirmaker Technology

Very weak diversification

The 3 months correlation between Futuretech and Cirmaker is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II Acquisition and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology and Futuretech 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 Futuretech II Acquisition are associated (or correlated) with Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Futuretech i.e., Futuretech and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Futuretech and Cirmaker Technology

Given the investment horizon of 90 days Futuretech is expected to generate 15.76 times less return on investment than Cirmaker Technology. But when comparing it to its historical volatility, Futuretech II Acquisition is 6.48 times less risky than Cirmaker Technology. It trades about 0.05 of its potential returns per unit of risk. Cirmaker Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Cirmaker Technology on December 22, 2024 and sell it today you would earn a total of  2.95  from holding Cirmaker Technology or generate 65.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.67%
Values	Daily Returns

Futuretech II Acquisition  vs.  Cirmaker Technology

Futuretech II Acquisition

Risk-Adjusted Performance

Insignificant

Over the last 90 days Futuretech II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unsteady forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cirmaker Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Futuretech and Cirmaker Technology

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

The idea behind Futuretech II Acquisition and Cirmaker Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.