Correlation Between Mobilicom Limited and Frequency Electronics

Can any of the company-specific risk be diversified away by investing in both Mobilicom Limited and Frequency Electronics 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 Mobilicom Limited and Frequency Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mobilicom Limited American and Frequency Electronics, you can compare the effects of market volatilities on Mobilicom Limited and Frequency Electronics 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 Mobilicom Limited with a short position of Frequency Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobilicom Limited and Frequency Electronics.

Diversification Opportunities for Mobilicom Limited and Frequency Electronics

0.76

Correlation Coefficient

Mobilicom Limited  Frequency Electronics

Poor diversification

The 3 months correlation between Mobilicom and Frequency is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mobilicom Limited American and Frequency Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Electronics and Mobilicom Limited 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 Mobilicom Limited American are associated (or correlated) with Frequency Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Electronics has no effect on the direction of Mobilicom Limited i.e., Mobilicom Limited and Frequency Electronics go up and down completely randomly.

Pair Corralation between Mobilicom Limited and Frequency Electronics

Considering the 90-day investment horizon Mobilicom Limited American is expected to under-perform the Frequency Electronics. In addition to that, Mobilicom Limited is 2.6 times more volatile than Frequency Electronics. It trades about -0.11 of its total potential returns per unit of risk. Frequency Electronics is currently generating about -0.08 per unit of volatility. If you would invest  1,864  in Frequency Electronics on December 30, 2024 and sell it today you would lose (311.00) from holding Frequency Electronics or give up 16.68% of portfolio value over 90 days.

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

Mobilicom Limited American  vs.  Frequency Electronics

Mobilicom Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mobilicom Limited American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Frequency Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frequency Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward 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 Mobilicom Limited and Frequency Electronics

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

The idea behind Mobilicom Limited American and Frequency Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.