Correlation Between Charles Schwab and FATFISH GROUP

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

By analyzing existing cross correlation between The Charles Schwab and FATFISH GROUP LTD, you can compare the effects of market volatilities on Charles Schwab and FATFISH GROUP 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 Charles Schwab with a short position of FATFISH GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and FATFISH GROUP.

Diversification Opportunities for Charles Schwab and FATFISH GROUP

0.75

Correlation Coefficient

Charles Schwab  FATFISH GROUP

Poor diversification

The 3 months correlation between Charles and FATFISH is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and FATFISH GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FATFISH GROUP LTD and Charles Schwab 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 The Charles Schwab are associated (or correlated) with FATFISH GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FATFISH GROUP LTD has no effect on the direction of Charles Schwab i.e., Charles Schwab and FATFISH GROUP go up and down completely randomly.

Pair Corralation between Charles Schwab and FATFISH GROUP

Assuming the 90 days horizon The Charles Schwab is expected to generate 0.2 times more return on investment than FATFISH GROUP. However, The Charles Schwab is 4.88 times less risky than FATFISH GROUP. It trades about 0.3 of its potential returns per unit of risk. FATFISH GROUP LTD is currently generating about 0.06 per unit of risk. If you would invest  6,470  in The Charles Schwab on September 1, 2024 and sell it today you would earn a total of  1,351  from holding The Charles Schwab or generate 20.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

The Charles Schwab  vs.  FATFISH GROUP LTD

Charles Schwab

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Charles Schwab reported solid returns over the last few months and may actually be approaching a breakup point.

FATFISH GROUP LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FATFISH GROUP LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FATFISH GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charles Schwab and FATFISH GROUP

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

The idea behind The Charles Schwab and FATFISH GROUP LTD 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.