Correlation Between Foraco International and Gratomic

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

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

Diversification Opportunities for Foraco International and Gratomic

0.04

Correlation Coefficient

Foraco International  Gratomic

Significant diversification

The 3 months correlation between Foraco and Gratomic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Foraco International SA and Gratomic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gratomic and Foraco International 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 Foraco International SA are associated (or correlated) with Gratomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gratomic has no effect on the direction of Foraco International i.e., Foraco International and Gratomic go up and down completely randomly.

Pair Corralation between Foraco International and Gratomic

Assuming the 90 days trading horizon Foraco International SA is expected to generate 0.39 times more return on investment than Gratomic. However, Foraco International SA is 2.53 times less risky than Gratomic. It trades about 0.05 of its potential returns per unit of risk. Gratomic is currently generating about -0.02 per unit of risk. If you would invest  138.00  in Foraco International SA on September 13, 2024 and sell it today you would earn a total of  96.00  from holding Foraco International SA or generate 69.57% return on investment over 90 days.

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

Foraco International SA  vs.  Gratomic

Foraco International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Foraco International SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Foraco International displayed solid returns over the last few months and may actually be approaching a breakup point.

Gratomic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gratomic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Foraco International and Gratomic

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

The idea behind Foraco International SA and Gratomic 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.