Correlation Between SS TECH and FNSTech

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

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

Diversification Opportunities for SS TECH and FNSTech

0.73

Correlation Coefficient

SS TECH  FNSTech

Poor diversification

The 3 months correlation between 101490 and FNSTech is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech and SS TECH 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 SS TECH are associated (or correlated) with FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of SS TECH i.e., SS TECH and FNSTech go up and down completely randomly.

Pair Corralation between SS TECH and FNSTech

Assuming the 90 days trading horizon SS TECH is expected to generate 0.68 times more return on investment than FNSTech. However, SS TECH is 1.47 times less risky than FNSTech. It trades about -0.13 of its potential returns per unit of risk. FNSTech Co is currently generating about -0.14 per unit of risk. If you would invest  4,520,000  in SS TECH on February 12, 2024 and sell it today you would lose (290,000) from holding SS TECH or give up 6.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

SS TECH  vs.  FNSTech Co

SS TECH

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SS TECH are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SS TECH may actually be approaching a critical reversion point that can send shares even higher in June 2024.

FNSTech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FNSTech Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FNSTech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SS TECH and FNSTech

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

The idea behind SS TECH and FNSTech Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.