Correlation Between Brd Klee and FOM Technologies

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

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

Diversification Opportunities for Brd Klee and FOM Technologies

0.57

Correlation Coefficient

Brd Klee  FOM Technologies

Very weak diversification

The 3 months correlation between Brd and FOM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Brd Klee AS and FOM Technologies AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOM Technologies and Brd Klee 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 Brd Klee AS are associated (or correlated) with FOM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOM Technologies has no effect on the direction of Brd Klee i.e., Brd Klee and FOM Technologies go up and down completely randomly.

Pair Corralation between Brd Klee and FOM Technologies

Assuming the 90 days trading horizon Brd Klee AS is expected to under-perform the FOM Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Brd Klee AS is 1.66 times less risky than FOM Technologies. The stock trades about -0.13 of its potential returns per unit of risk. The FOM Technologies AS is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in FOM Technologies AS on September 14, 2024 and sell it today you would lose (34.00) from holding FOM Technologies AS or give up 3.4% of portfolio value over 90 days.

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

Brd Klee AS  vs.  FOM Technologies AS

Brd Klee AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brd Klee AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Brd Klee is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FOM Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOM Technologies AS 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 primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brd Klee and FOM Technologies

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

The idea behind Brd Klee AS and FOM Technologies AS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.