Correlation Between FP Newspapers and Aterian

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

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

Diversification Opportunities for FP Newspapers and Aterian

0.5

Correlation Coefficient

FP Newspapers  Aterian

Very weak diversification

The 3 months correlation between FPNUF and Aterian is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FP Newspapers and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and FP Newspapers 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 FP Newspapers are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of FP Newspapers i.e., FP Newspapers and Aterian go up and down completely randomly.

Pair Corralation between FP Newspapers and Aterian

Assuming the 90 days horizon FP Newspapers is expected to generate 0.3 times more return on investment than Aterian. However, FP Newspapers is 3.33 times less risky than Aterian. It trades about -0.04 of its potential returns per unit of risk. Aterian is currently generating about -0.02 per unit of risk. If you would invest  60.00  in FP Newspapers on September 17, 2024 and sell it today you would lose (22.00) from holding FP Newspapers or give up 36.67% of portfolio value over 90 days.

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

FP Newspapers  vs.  Aterian

FP Newspapers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FP Newspapers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with FP Newspapers and Aterian

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

The idea behind FP Newspapers and Aterian 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.