Correlation Between FORMPIPE SOFTWARE and SPORT LISBOA

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

By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and SPORT LISBOA E, you can compare the effects of market volatilities on FORMPIPE SOFTWARE and SPORT LISBOA 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 FORMPIPE SOFTWARE with a short position of SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and SPORT LISBOA.

Diversification Opportunities for FORMPIPE SOFTWARE and SPORT LISBOA

-0.06

Correlation Coefficient

FORMPIPE SOFTWARE  SPORT LISBOA

Good diversification

The 3 months correlation between FORMPIPE and SPORT is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB are associated (or correlated) with SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and SPORT LISBOA go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and SPORT LISBOA

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 1.26 times more return on investment than SPORT LISBOA. However, FORMPIPE SOFTWARE is 1.26 times more volatile than SPORT LISBOA E. It trades about 0.04 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.0 per unit of risk. If you would invest  201.00  in FORMPIPE SOFTWARE AB on August 31, 2024 and sell it today you would earn a total of  11.00  from holding FORMPIPE SOFTWARE AB or generate 5.47% return on investment over 90 days.

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

FORMPIPE SOFTWARE AB  vs.  SPORT LISBOA E

FORMPIPE SOFTWARE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORMPIPE SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in December 2024.

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORMPIPE SOFTWARE and SPORT LISBOA

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

The idea behind FORMPIPE SOFTWARE AB and SPORT LISBOA E 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.