Correlation Between International Business and FONIX MOBILE

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

By analyzing existing cross correlation between International Business Machines and FONIX MOBILE PLC, you can compare the effects of market volatilities on International Business and FONIX MOBILE 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 International Business with a short position of FONIX MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and FONIX MOBILE.

Diversification Opportunities for International Business and FONIX MOBILE

-0.35

Correlation Coefficient

International Business  FONIX MOBILE

Very good diversification

The 3 months correlation between International and FONIX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and FONIX MOBILE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FONIX MOBILE PLC and International Business 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 International Business Machines are associated (or correlated) with FONIX MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FONIX MOBILE PLC has no effect on the direction of International Business i.e., International Business and FONIX MOBILE go up and down completely randomly.

Pair Corralation between International Business and FONIX MOBILE

Assuming the 90 days horizon International Business Machines is expected to under-perform the FONIX MOBILE. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 2.17 times less risky than FONIX MOBILE. The stock trades about -0.28 of its potential returns per unit of risk. The FONIX MOBILE PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  254.00  in FONIX MOBILE PLC on October 8, 2024 and sell it today you would earn a total of  8.00  from holding FONIX MOBILE PLC or generate 3.15% return on investment over 90 days.

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

International Business Machine  vs.  FONIX MOBILE PLC

International Business

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, International Business is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FONIX MOBILE PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FONIX MOBILE PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FONIX MOBILE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Business and FONIX MOBILE

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

The idea behind International Business Machines and FONIX MOBILE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.