Correlation Between SFS REAL and FIDSON HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both SFS REAL and FIDSON HEALTHCARE 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 SFS REAL and FIDSON HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SFS REAL ESTATE and FIDSON HEALTHCARE PLC, you can compare the effects of market volatilities on SFS REAL and FIDSON HEALTHCARE 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 SFS REAL with a short position of FIDSON HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFS REAL and FIDSON HEALTHCARE.

Diversification Opportunities for SFS REAL and FIDSON HEALTHCARE

0.0

Correlation Coefficient

SFS REAL  FIDSON HEALTHCARE

Pay attention - limited upside

The 3 months correlation between SFS and FIDSON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SFS REAL ESTATE and FIDSON HEALTHCARE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDSON HEALTHCARE PLC and SFS REAL 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 SFS REAL ESTATE are associated (or correlated) with FIDSON HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDSON HEALTHCARE PLC has no effect on the direction of SFS REAL i.e., SFS REAL and FIDSON HEALTHCARE go up and down completely randomly.

Pair Corralation between SFS REAL and FIDSON HEALTHCARE

Assuming the 90 days trading horizon SFS REAL ESTATE is expected to generate 0.71 times more return on investment than FIDSON HEALTHCARE. However, SFS REAL ESTATE is 1.41 times less risky than FIDSON HEALTHCARE. It trades about 0.17 of its potential returns per unit of risk. FIDSON HEALTHCARE PLC is currently generating about 0.02 per unit of risk. If you would invest  8,685  in SFS REAL ESTATE on October 3, 2024 and sell it today you would earn a total of  9,260  from holding SFS REAL ESTATE or generate 106.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.04%
Values	Daily Returns

SFS REAL ESTATE  vs.  FIDSON HEALTHCARE PLC

SFS REAL ESTATE

Risk-Adjusted Performance

0 of 100

Very Weak

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

FIDSON HEALTHCARE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIDSON HEALTHCARE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FIDSON HEALTHCARE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SFS REAL and FIDSON HEALTHCARE

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

The idea behind SFS REAL ESTATE and FIDSON HEALTHCARE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.