Correlation Between FD Technologies and Ovoca Gold

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

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

Diversification Opportunities for FD Technologies and Ovoca Gold

-0.48

Correlation Coefficient

FD Technologies  Ovoca Gold

Very good diversification

The 3 months correlation between GYQ and Ovoca is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding FD Technologies PLC and Ovoca Gold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovoca Gold PLC and FD Technologies 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 FD Technologies PLC are associated (or correlated) with Ovoca Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovoca Gold PLC has no effect on the direction of FD Technologies i.e., FD Technologies and Ovoca Gold go up and down completely randomly.

Pair Corralation between FD Technologies and Ovoca Gold

Assuming the 90 days trading horizon FD Technologies PLC is expected to generate 0.06 times more return on investment than Ovoca Gold. However, FD Technologies PLC is 17.83 times less risky than Ovoca Gold. It trades about -0.23 of its potential returns per unit of risk. Ovoca Gold PLC is currently generating about -0.23 per unit of risk. If you would invest  2,140  in FD Technologies PLC on October 10, 2024 and sell it today you would lose (20.00) from holding FD Technologies PLC or give up 0.93% of portfolio value over 90 days.

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

FD Technologies PLC  vs.  Ovoca Gold PLC

FD Technologies PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FD Technologies PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FD Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ovoca Gold PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ovoca Gold PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Ovoca Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FD Technologies and Ovoca Gold

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

The idea behind FD Technologies PLC and Ovoca Gold PLC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.