Correlation Between Shenandoah Telecommunicatio and FOSTOURGRP

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

By analyzing existing cross correlation between Shenandoah Telecommunications and FOSTOURGRP EO 0001, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and FOSTOURGRP 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 Shenandoah Telecommunicatio with a short position of FOSTOURGRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and FOSTOURGRP.

Diversification Opportunities for Shenandoah Telecommunicatio and FOSTOURGRP

-0.36

Correlation Coefficient

Shenandoah Telecommunicatio  FOSTOURGRP

Very good diversification

The 3 months correlation between Shenandoah and FOSTOURGRP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and FOSTOURGRP EO 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOSTOURGRP EO 0001 and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications are associated (or correlated) with FOSTOURGRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOSTOURGRP EO 0001 has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and FOSTOURGRP go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and FOSTOURGRP

Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the FOSTOURGRP. In addition to that, Shenandoah Telecommunicatio is 2.39 times more volatile than FOSTOURGRP EO 0001. It trades about -0.35 of its total potential returns per unit of risk. FOSTOURGRP EO 0001 is currently generating about -0.07 per unit of volatility. If you would invest  90.00  in FOSTOURGRP EO 0001 on October 27, 2024 and sell it today you would lose (1.00) from holding FOSTOURGRP EO 0001 or give up 1.11% of portfolio value over 90 days.

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

Shenandoah Telecommunications  vs.  FOSTOURGRP EO 0001

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FOSTOURGRP EO 0001

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FOSTOURGRP EO 0001 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FOSTOURGRP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenandoah Telecommunicatio and FOSTOURGRP

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

The idea behind Shenandoah Telecommunications and FOSTOURGRP EO 0001 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.