Correlation Between Walgreens Boots and FIT Hon

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

By analyzing existing cross correlation between Walgreens Boots Alliance and FIT Hon Teng, you can compare the effects of market volatilities on Walgreens Boots and FIT Hon 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 Walgreens Boots with a short position of FIT Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and FIT Hon.

Diversification Opportunities for Walgreens Boots and FIT Hon

0.27

Correlation Coefficient

Walgreens Boots  FIT Hon

Modest diversification

The 3 months correlation between Walgreens and FIT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and FIT Hon Teng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT Hon Teng and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with FIT Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT Hon Teng has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and FIT Hon go up and down completely randomly.

Pair Corralation between Walgreens Boots and FIT Hon

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the FIT Hon. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 2.13 times less risky than FIT Hon. The stock trades about -0.09 of its potential returns per unit of risk. The FIT Hon Teng is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in FIT Hon Teng on September 20, 2024 and sell it today you would earn a total of  14.00  from holding FIT Hon Teng or generate 56.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.47%
Values	Daily Returns

Walgreens Boots Alliance  vs.  FIT Hon Teng

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

FIT Hon Teng

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIT Hon Teng are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, FIT Hon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and FIT Hon

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

The idea behind Walgreens Boots Alliance and FIT Hon Teng 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.