Correlation Between Fourlis Holdings and Public Power

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

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

Diversification Opportunities for Fourlis Holdings and Public Power

0.08

Correlation Coefficient

Fourlis Holdings  Public Power

Significant diversification

The 3 months correlation between Fourlis and Public is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fourlis Holdings SA and Public Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Power and Fourlis Holdings 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 Fourlis Holdings SA are associated (or correlated) with Public Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Power has no effect on the direction of Fourlis Holdings i.e., Fourlis Holdings and Public Power go up and down completely randomly.

Pair Corralation between Fourlis Holdings and Public Power

Assuming the 90 days trading horizon Fourlis Holdings SA is expected to under-perform the Public Power. But the stock apears to be less risky and, when comparing its historical volatility, Fourlis Holdings SA is 1.05 times less risky than Public Power. The stock trades about -0.05 of its potential returns per unit of risk. The Public Power is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,128  in Public Power on September 15, 2024 and sell it today you would earn a total of  66.00  from holding Public Power or generate 5.85% return on investment over 90 days.

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

Fourlis Holdings SA  vs.  Public Power

Fourlis Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fourlis Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fourlis Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Public Power

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fourlis Holdings and Public Power

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

The idea behind Fourlis Holdings SA and Public Power 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.