Correlation Between FMS Enterprises and Carmit

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

Diversification Opportunities for FMS Enterprises and Carmit

0.38

Correlation Coefficient

FMS Enterprises  Carmit

Weak diversification

The 3 months correlation between FMS and Carmit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FMS Enterprises Migun and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit 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 Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of FMS Enterprises i.e., FMS Enterprises and Carmit go up and down completely randomly.

Pair Corralation between FMS Enterprises and Carmit

Assuming the 90 days trading horizon FMS Enterprises Migun is expected to generate 0.78 times more return on investment than Carmit. However, FMS Enterprises Migun is 1.28 times less risky than Carmit. It trades about 0.17 of its potential returns per unit of risk. Carmit is currently generating about 0.02 per unit of risk. If you would invest  1,215,380  in FMS Enterprises Migun on September 28, 2024 and sell it today you would earn a total of  215,620  from holding FMS Enterprises Migun or generate 17.74% return on investment over 90 days.

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

FMS Enterprises Migun  vs.  Carmit

FMS Enterprises Migun

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FMS Enterprises Migun are ranked lower than 13 (%) 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.

Carmit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carmit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Carmit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FMS Enterprises and Carmit

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

The idea behind FMS Enterprises Migun and Carmit 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.