Correlation Between FMS Enterprises and Ashtrom

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

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

Diversification Opportunities for FMS Enterprises and Ashtrom

0.82

Correlation Coefficient

FMS Enterprises  Ashtrom

Very poor diversification

The 3 months correlation between FMS and Ashtrom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding FMS Enterprises Migun and Ashtrom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtrom Group and FMS Enterprises 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 FMS Enterprises Migun are associated (or correlated) with Ashtrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtrom Group has no effect on the direction of FMS Enterprises i.e., FMS Enterprises and Ashtrom go up and down completely randomly.

Pair Corralation between FMS Enterprises and Ashtrom

Assuming the 90 days trading horizon FMS Enterprises Migun is expected to under-perform the Ashtrom. In addition to that, FMS Enterprises is 1.05 times more volatile than Ashtrom Group. It trades about -0.12 of its total potential returns per unit of risk. Ashtrom Group is currently generating about 0.3 per unit of volatility. If you would invest  590,000  in Ashtrom Group on September 25, 2024 and sell it today you would earn a total of  69,300  from holding Ashtrom Group or generate 11.75% return on investment over 90 days.

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

FMS Enterprises Migun  vs.  Ashtrom Group

FMS Enterprises Migun

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FMS Enterprises Migun are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FMS Enterprises sustained solid returns over the last few months and may actually be approaching a breakup point.

Ashtrom Group

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtrom Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ashtrom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FMS Enterprises and Ashtrom

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

The idea behind FMS Enterprises Migun and Ashtrom Group 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.