Correlation Between Futuris and Hirequest

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

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

Diversification Opportunities for Futuris and Hirequest

0.25

Correlation Coefficient

Futuris  Hirequest

Modest diversification

The 3 months correlation between Futuris and Hirequest is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Futuris Company and Hirequest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirequest and Futuris 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 Futuris Company are associated (or correlated) with Hirequest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirequest has no effect on the direction of Futuris i.e., Futuris and Hirequest go up and down completely randomly.

Pair Corralation between Futuris and Hirequest

Given the investment horizon of 90 days Futuris Company is expected to generate 3.67 times more return on investment than Hirequest. However, Futuris is 3.67 times more volatile than Hirequest. It trades about 0.02 of its potential returns per unit of risk. Hirequest is currently generating about 0.06 per unit of risk. If you would invest  1.73  in Futuris Company on September 5, 2024 and sell it today you would lose (0.22) from holding Futuris Company or give up 12.72% of portfolio value over 90 days.

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

Futuris Company  vs.  Hirequest

Futuris Company

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Futuris Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Futuris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hirequest

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Futuris and Hirequest

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

The idea behind Futuris Company and Hirequest 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.