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

0.42

Correlation Coefficient

International Business  FONIX MOBILE

Very weak diversification

The 3 months correlation between International and FONIX is 0.42. 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 trading horizon International Business Machines is expected to generate 0.88 times more return on investment than FONIX MOBILE. However, International Business Machines is 1.14 times less risky than FONIX MOBILE. It trades about 0.07 of its potential returns per unit of risk. FONIX MOBILE PLC is currently generating about -0.07 per unit of risk. If you would invest  21,190  in International Business Machines on December 26, 2024 and sell it today you would earn a total of  1,800  from holding International Business Machines or generate 8.49% return on investment over 90 days.

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

International Business Machine  vs.  FONIX MOBILE PLC

International Business

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, International Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FONIX MOBILE PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days FONIX MOBILE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.