Correlation Between Track and Focus Universal

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

By analyzing existing cross correlation between Track Group and Focus Universal, you can compare the effects of market volatilities on Track and Focus Universal 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 Track with a short position of Focus Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Track and Focus Universal.

Diversification Opportunities for Track and Focus Universal

-0.37

Correlation Coefficient

Track  Focus Universal

Very good diversification

The 3 months correlation between Track and Focus is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Track Group and Focus Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Universal and Track 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 Track Group are associated (or correlated) with Focus Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Universal has no effect on the direction of Track i.e., Track and Focus Universal go up and down completely randomly.

Pair Corralation between Track and Focus Universal

Given the investment horizon of 90 days Track is expected to generate 2.49 times less return on investment than Focus Universal. But when comparing it to its historical volatility, Track Group is 3.36 times less risky than Focus Universal. It trades about 0.16 of its potential returns per unit of risk. Focus Universal is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  265.00  in Focus Universal on December 25, 2024 and sell it today you would earn a total of  227.00  from holding Focus Universal or generate 85.66% return on investment over 90 days.

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

Track Group  vs.  Focus Universal

Track Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Track Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Track disclosed solid returns over the last few months and may actually be approaching a breakup point.

Focus Universal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Universal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Focus Universal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Track and Focus Universal

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

The idea behind Track Group and Focus Universal 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.