Correlation Between Financial Strategies and Fat Projects

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

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

Diversification Opportunities for Financial Strategies and Fat Projects

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Correlation Coefficient

Financial Strategies  Fat Projects

Pay attention - limited upside

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

Pair Corralation between Financial Strategies and Fat Projects

Assuming the 90 days horizon Financial Strategies Acquisition is expected to generate 1.83 times more return on investment than Fat Projects. However, Financial Strategies is 1.83 times more volatile than Fat Projects Acquisition. It trades about 0.14 of its potential returns per unit of risk. Fat Projects Acquisition is currently generating about 0.07 per unit of risk. If you would invest  12.00  in Financial Strategies Acquisition on October 25, 2024 and sell it today you would earn a total of  4.00  from holding Financial Strategies Acquisition or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	55.0%
Values	Daily Returns

Financial Strategies Acquisiti  vs.  Fat Projects Acquisition

Financial Strategies

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Financial Strategies Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Financial Strategies is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fat Projects Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fat Projects Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fat Projects is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Financial Strategies and Fat Projects

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

The idea behind Financial Strategies Acquisition and Fat Projects Acquisition 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.