Correlation Between Trio Tech and FMC

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

By analyzing existing cross correlation between Trio Tech International and FMC Corporation, you can compare the effects of market volatilities on Trio Tech and FMC 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 Trio Tech with a short position of FMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Tech and FMC.

Diversification Opportunities for Trio Tech and FMC

0.6

Correlation Coefficient

Trio Tech  FMC

Poor diversification

The 3 months correlation between Trio and FMC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Trio Tech 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 Trio Tech International are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Trio Tech i.e., Trio Tech and FMC go up and down completely randomly.

Pair Corralation between Trio Tech and FMC

Considering the 90-day investment horizon Trio Tech International is expected to under-perform the FMC. In addition to that, Trio Tech is 1.09 times more volatile than FMC Corporation. It trades about -0.07 of its total potential returns per unit of risk. FMC Corporation is currently generating about 0.42 per unit of volatility. If you would invest  4,854  in FMC Corporation on October 26, 2024 and sell it today you would earn a total of  702.00  from holding FMC Corporation or generate 14.46% return on investment over 90 days.

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

Trio Tech International  vs.  FMC Corp.

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

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

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Trio Tech and FMC

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

The idea behind Trio Tech International and FMC Corporation 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.