Correlation Between FMS Enterprises and Bet Shemesh

Can any of the company-specific risk be diversified away by investing in both FMS Enterprises and Bet Shemesh 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 Bet Shemesh 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 Bet Shemesh Engines, you can compare the effects of market volatilities on FMS Enterprises and Bet Shemesh 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 Bet Shemesh. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMS Enterprises and Bet Shemesh.

Diversification Opportunities for FMS Enterprises and Bet Shemesh

0.76

Correlation Coefficient

FMS Enterprises  Bet Shemesh

Poor diversification

The 3 months correlation between FMS and Bet is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FMS Enterprises Migun and Bet Shemesh Engines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bet Shemesh Engines 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 Bet Shemesh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bet Shemesh Engines has no effect on the direction of FMS Enterprises i.e., FMS Enterprises and Bet Shemesh go up and down completely randomly.

Pair Corralation between FMS Enterprises and Bet Shemesh

Assuming the 90 days trading horizon FMS Enterprises Migun is expected to generate 0.58 times more return on investment than Bet Shemesh. However, FMS Enterprises Migun is 1.72 times less risky than Bet Shemesh. It trades about 0.1 of its potential returns per unit of risk. Bet Shemesh Engines is currently generating about 0.01 per unit of risk. If you would invest  1,349,873  in FMS Enterprises Migun on September 26, 2024 and sell it today you would earn a total of  90,127  from holding FMS Enterprises Migun or generate 6.68% return on investment over 90 days.

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

FMS Enterprises Migun  vs.  Bet Shemesh Engines

FMS Enterprises Migun

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FMS Enterprises Migun are ranked lower than 14 (%) 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.

Bet Shemesh Engines

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bet Shemesh Engines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bet Shemesh sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FMS Enterprises and Bet Shemesh

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

The idea behind FMS Enterprises Migun and Bet Shemesh Engines 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.