Correlation Between FormPipe Software and JLT Mobile

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

By analyzing existing cross correlation between FormPipe Software AB and JLT Mobile Computers, you can compare the effects of market volatilities on FormPipe Software and JLT Mobile 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 FormPipe Software with a short position of JLT Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormPipe Software and JLT Mobile.

Diversification Opportunities for FormPipe Software and JLT Mobile

0.48

Correlation Coefficient

FormPipe Software  JLT Mobile

Very weak diversification

The 3 months correlation between FormPipe and JLT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and JLT Mobile Computers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLT Mobile Computers and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with JLT Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLT Mobile Computers has no effect on the direction of FormPipe Software i.e., FormPipe Software and JLT Mobile go up and down completely randomly.

Pair Corralation between FormPipe Software and JLT Mobile

Assuming the 90 days trading horizon FormPipe Software AB is expected to generate 0.97 times more return on investment than JLT Mobile. However, FormPipe Software AB is 1.03 times less risky than JLT Mobile. It trades about -0.1 of its potential returns per unit of risk. JLT Mobile Computers is currently generating about -0.33 per unit of risk. If you would invest  2,520  in FormPipe Software AB on September 13, 2024 and sell it today you would lose (120.00) from holding FormPipe Software AB or give up 4.76% of portfolio value over 90 days.

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

FormPipe Software AB  vs.  JLT Mobile Computers

FormPipe Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormPipe Software AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FormPipe Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JLT Mobile Computers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JLT Mobile Computers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with FormPipe Software and JLT Mobile

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

The idea behind FormPipe Software AB and JLT Mobile Computers 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.