Correlation Between Futura Medical and Schweiter Technologies

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

By analyzing existing cross correlation between Futura Medical and Schweiter Technologies AG, you can compare the effects of market volatilities on Futura Medical and Schweiter Technologies 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 Futura Medical with a short position of Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futura Medical and Schweiter Technologies.

Diversification Opportunities for Futura Medical and Schweiter Technologies

0.34

Correlation Coefficient

Futura Medical  Schweiter Technologies

Weak diversification

The 3 months correlation between Futura and Schweiter is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Futura Medical and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and Futura Medical 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 Futura Medical are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Futura Medical i.e., Futura Medical and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Futura Medical and Schweiter Technologies

Assuming the 90 days trading horizon Futura Medical is expected to under-perform the Schweiter Technologies. In addition to that, Futura Medical is 1.08 times more volatile than Schweiter Technologies AG. It trades about -0.04 of its total potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.04 per unit of volatility. If you would invest  38,600  in Schweiter Technologies AG on September 17, 2024 and sell it today you would earn a total of  1,800  from holding Schweiter Technologies AG or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Futura Medical  vs.  Schweiter Technologies AG

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Schweiter Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Futura Medical and Schweiter Technologies

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

The idea behind Futura Medical and Schweiter Technologies AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.