Correlation Between HVC Investment and FPT Corp

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

By analyzing existing cross correlation between HVC Investment and and FPT Corp, you can compare the effects of market volatilities on HVC Investment and FPT Corp 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 HVC Investment with a short position of FPT Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HVC Investment and FPT Corp.

Diversification Opportunities for HVC Investment and FPT Corp

0.08

Correlation Coefficient

HVC Investment  FPT Corp

Significant diversification

The 3 months correlation between HVC and FPT is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding HVC Investment and and FPT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Corp and HVC Investment 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 HVC Investment and are associated (or correlated) with FPT Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Corp has no effect on the direction of HVC Investment i.e., HVC Investment and FPT Corp go up and down completely randomly.

Pair Corralation between HVC Investment and FPT Corp

Assuming the 90 days trading horizon HVC Investment and is expected to generate 1.63 times more return on investment than FPT Corp. However, HVC Investment is 1.63 times more volatile than FPT Corp. It trades about -0.06 of its potential returns per unit of risk. FPT Corp is currently generating about -0.21 per unit of risk. If you would invest  1,024,713  in HVC Investment and on December 20, 2024 and sell it today you would lose (91,713) from holding HVC Investment and or give up 8.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

HVC Investment and  vs.  FPT Corp

HVC Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days HVC Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

FPT Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FPT Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with HVC Investment and FPT Corp

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

The idea behind HVC Investment and and FPT Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.