Correlation Between PB Fintech and FCS Software

Can any of the company-specific risk be diversified away by investing in both PB Fintech and FCS Software 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 PB Fintech and FCS Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PB Fintech Limited and FCS Software Solutions, you can compare the effects of market volatilities on PB Fintech and FCS Software 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 PB Fintech with a short position of FCS Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of PB Fintech and FCS Software.

Diversification Opportunities for PB Fintech and FCS Software

0.32

Correlation Coefficient

PB Fintech  FCS Software

Weak diversification

The 3 months correlation between POLICYBZR and FCS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PB Fintech Limited and FCS Software Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FCS Software Solutions and PB Fintech 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 PB Fintech Limited are associated (or correlated) with FCS Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FCS Software Solutions has no effect on the direction of PB Fintech i.e., PB Fintech and FCS Software go up and down completely randomly.

Pair Corralation between PB Fintech and FCS Software

Assuming the 90 days trading horizon PB Fintech Limited is expected to generate 0.92 times more return on investment than FCS Software. However, PB Fintech Limited is 1.09 times less risky than FCS Software. It trades about 0.51 of its potential returns per unit of risk. FCS Software Solutions is currently generating about 0.17 per unit of risk. If you would invest  171,985  in PB Fintech Limited on September 19, 2024 and sell it today you would earn a total of  41,360  from holding PB Fintech Limited or generate 24.05% return on investment over 90 days.

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

PB Fintech Limited  vs.  FCS Software Solutions

PB Fintech Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PB Fintech Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, PB Fintech sustained solid returns over the last few months and may actually be approaching a breakup point.

FCS Software Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FCS Software Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FCS Software is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PB Fintech and FCS Software

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

The idea behind PB Fintech Limited and FCS Software Solutions 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.