Correlation Between South Books and FIT INVEST

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

By analyzing existing cross correlation between South Books Educational and FIT INVEST JSC, you can compare the effects of market volatilities on South Books and FIT INVEST 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 South Books with a short position of FIT INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Books and FIT INVEST.

Diversification Opportunities for South Books and FIT INVEST

-0.31

Correlation Coefficient

South Books  FIT INVEST

Very good diversification

The 3 months correlation between South and FIT is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding South Books Educational and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC and South Books 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 South Books Educational are associated (or correlated) with FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of South Books i.e., South Books and FIT INVEST go up and down completely randomly.

Pair Corralation between South Books and FIT INVEST

Assuming the 90 days trading horizon South Books Educational is expected to under-perform the FIT INVEST. In addition to that, South Books is 4.68 times more volatile than FIT INVEST JSC. It trades about -0.09 of its total potential returns per unit of risk. FIT INVEST JSC is currently generating about -0.31 per unit of volatility. If you would invest  422,000  in FIT INVEST JSC on October 23, 2024 and sell it today you would lose (19,000) from holding FIT INVEST JSC or give up 4.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

South Books Educational  vs.  FIT INVEST JSC

South Books Educational

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Books Educational has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, South Books is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIT INVEST JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with South Books and FIT INVEST

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

The idea behind South Books Educational and FIT INVEST JSC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.