Correlation Between Fenbo Holdings and Ammo

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

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

Diversification Opportunities for Fenbo Holdings and Ammo

0.78

Correlation Coefficient

Fenbo Holdings  Ammo

Poor diversification

The 3 months correlation between Fenbo and Ammo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fenbo Holdings Limited and Ammo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ammo Inc and Fenbo Holdings 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 Fenbo Holdings Limited are associated (or correlated) with Ammo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ammo Inc has no effect on the direction of Fenbo Holdings i.e., Fenbo Holdings and Ammo go up and down completely randomly.

Pair Corralation between Fenbo Holdings and Ammo

Given the investment horizon of 90 days Fenbo Holdings Limited is expected to generate 2.8 times more return on investment than Ammo. However, Fenbo Holdings is 2.8 times more volatile than Ammo Inc. It trades about -0.01 of its potential returns per unit of risk. Ammo Inc is currently generating about -0.07 per unit of risk. If you would invest  373.00  in Fenbo Holdings Limited on August 12, 2024 and sell it today you would lose (49.00) from holding Fenbo Holdings Limited or give up 13.14% of portfolio value over 90 days.

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

Fenbo Holdings Limited  vs.  Ammo Inc

Fenbo Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fenbo Holdings Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Fenbo Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Ammo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ammo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Fenbo Holdings and Ammo

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

The idea behind Fenbo Holdings Limited and Ammo Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.