Correlation Between Fino Payments and Shipping

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

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

Diversification Opportunities for Fino Payments and Shipping

0.75

Correlation Coefficient

Fino Payments  Shipping

Poor diversification

The 3 months correlation between Fino and Shipping is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fino Payments Bank and Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shipping and Fino Payments 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 Fino Payments Bank are associated (or correlated) with Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shipping has no effect on the direction of Fino Payments i.e., Fino Payments and Shipping go up and down completely randomly.

Pair Corralation between Fino Payments and Shipping

Assuming the 90 days trading horizon Fino Payments Bank is expected to generate 1.04 times more return on investment than Shipping. However, Fino Payments is 1.04 times more volatile than Shipping. It trades about -0.04 of its potential returns per unit of risk. Shipping is currently generating about -0.06 per unit of risk. If you would invest  40,795  in Fino Payments Bank on September 3, 2024 and sell it today you would lose (3,765) from holding Fino Payments Bank or give up 9.23% of portfolio value over 90 days.

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

Fino Payments Bank  vs.  Shipping

Fino Payments Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fino Payments Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Fino Payments and Shipping

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

The idea behind Fino Payments Bank and Shipping 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.