Correlation Between Forth Smart and E For

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

By analyzing existing cross correlation between Forth Smart Service and E for L, you can compare the effects of market volatilities on Forth Smart and E For 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 Forth Smart with a short position of E For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forth Smart and E For.

Diversification Opportunities for Forth Smart and E For

0.92

Correlation Coefficient

Forth Smart  E For

Almost no diversification

The 3 months correlation between Forth and EFORL is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Forth Smart Service and E for L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E for L and Forth Smart 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 Forth Smart Service are associated (or correlated) with E For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E for L has no effect on the direction of Forth Smart i.e., Forth Smart and E For go up and down completely randomly.

Pair Corralation between Forth Smart and E For

Assuming the 90 days trading horizon Forth Smart is expected to generate 2.58 times less return on investment than E For. But when comparing it to its historical volatility, Forth Smart Service is 1.48 times less risky than E For. It trades about 0.12 of its potential returns per unit of risk. E for L is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13.00  in E for L on September 29, 2024 and sell it today you would earn a total of  14.00  from holding E for L or generate 107.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Forth Smart Service  vs.  E for L

Forth Smart Service

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forth Smart Service are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Forth Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

E for L

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E for L are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, E For sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forth Smart and E For

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

The idea behind Forth Smart Service and E for L 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.