Correlation Between FIT Hon and Flex

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

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

Diversification Opportunities for FIT Hon and Flex

0.67

Correlation Coefficient

FIT Hon  Flex

Poor diversification

The 3 months correlation between FIT and Flex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding FIT Hon Teng and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and FIT Hon 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 FIT Hon Teng are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of FIT Hon i.e., FIT Hon and Flex go up and down completely randomly.

Pair Corralation between FIT Hon and Flex

Assuming the 90 days horizon FIT Hon Teng is expected to generate 3.71 times more return on investment than Flex. However, FIT Hon is 3.71 times more volatile than Flex. It trades about 0.12 of its potential returns per unit of risk. Flex is currently generating about 0.11 per unit of risk. If you would invest  25.00  in FIT Hon Teng on September 21, 2024 and sell it today you would earn a total of  14.00  from holding FIT Hon Teng or generate 56.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

FIT Hon Teng  vs.  Flex

FIT Hon Teng

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIT Hon Teng are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, FIT Hon reported solid returns over the last few months and may actually be approaching a breakup point.

Flex

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIT Hon and Flex

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

The idea behind FIT Hon Teng and Flex 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.