Correlation Between Flexible Solutions and Joint Stock

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

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

Diversification Opportunities for Flexible Solutions and Joint Stock

0.61

Correlation Coefficient

Flexible Solutions  Joint Stock

Poor diversification

The 3 months correlation between Flexible and Joint is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Joint Stock go up and down completely randomly.

Pair Corralation between Flexible Solutions and Joint Stock

Considering the 90-day investment horizon Flexible Solutions International is expected to generate 1.44 times more return on investment than Joint Stock. However, Flexible Solutions is 1.44 times more volatile than Joint Stock. It trades about 0.02 of its potential returns per unit of risk. Joint Stock is currently generating about 0.02 per unit of risk. If you would invest  352.00  in Flexible Solutions International on September 22, 2024 and sell it today you would earn a total of  3.00  from holding Flexible Solutions International or generate 0.85% return on investment over 90 days.

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

Flexible Solutions Internation  vs.  Joint Stock

Flexible Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Flexible Solutions is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Joint Stock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joint Stock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Flexible Solutions and Joint Stock

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

The idea behind Flexible Solutions International and Joint Stock 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.