Correlation Between Frequency Electronics and Metalert

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

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

Diversification Opportunities for Frequency Electronics and Metalert

-0.33

Correlation Coefficient

Frequency Electronics  Metalert

Very good diversification

The 3 months correlation between Frequency and Metalert is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and Metalert in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalert and Frequency Electronics 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 Frequency Electronics are associated (or correlated) with Metalert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalert has no effect on the direction of Frequency Electronics i.e., Frequency Electronics and Metalert go up and down completely randomly.

Pair Corralation between Frequency Electronics and Metalert

Given the investment horizon of 90 days Frequency Electronics is expected to generate 78.35 times less return on investment than Metalert. But when comparing it to its historical volatility, Frequency Electronics is 7.42 times less risky than Metalert. It trades about 0.01 of its potential returns per unit of risk. Metalert is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.60  in Metalert on September 3, 2024 and sell it today you would earn a total of  2.40  from holding Metalert or generate 92.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Frequency Electronics  vs.  Metalert

Frequency Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Frequency Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Frequency Electronics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Metalert

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalert are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Metalert unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frequency Electronics and Metalert

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

The idea behind Frequency Electronics and Metalert 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.