Correlation Between People Technology and Formetal

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

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

Diversification Opportunities for People Technology and Formetal

-0.13

Correlation Coefficient

People Technology  Formetal

Good diversification

The 3 months correlation between People and Formetal is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding People Technology and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and People Technology 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 People Technology are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of People Technology i.e., People Technology and Formetal go up and down completely randomly.

Pair Corralation between People Technology and Formetal

Assuming the 90 days trading horizon People Technology is expected to under-perform the Formetal. But the stock apears to be less risky and, when comparing its historical volatility, People Technology is 1.04 times less risky than Formetal. The stock trades about -0.14 of its potential returns per unit of risk. The Formetal Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  280,500  in Formetal Co on September 24, 2024 and sell it today you would earn a total of  9,000  from holding Formetal Co or generate 3.21% return on investment over 90 days.

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

People Technology  vs.  Formetal Co

People Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days People Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Formetal

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Formetal Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Formetal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with People Technology and Formetal

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

The idea behind People Technology and Formetal Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.