Correlation Between 80 Mile and Frontier Developments

Can any of the company-specific risk be diversified away by investing in both 80 Mile and Frontier Developments 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 80 Mile and Frontier Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 80 Mile Plc and Frontier Developments Plc, you can compare the effects of market volatilities on 80 Mile and Frontier Developments 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 80 Mile with a short position of Frontier Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of 80 Mile and Frontier Developments.

Diversification Opportunities for 80 Mile and Frontier Developments

-0.64

Correlation Coefficient

80 Mile  Frontier Developments

Excellent diversification

The 3 months correlation between 80M and Frontier is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding 80 Mile Plc and Frontier Developments Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Developments Plc and 80 Mile 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 80 Mile Plc are associated (or correlated) with Frontier Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Developments Plc has no effect on the direction of 80 Mile i.e., 80 Mile and Frontier Developments go up and down completely randomly.

Pair Corralation between 80 Mile and Frontier Developments

Assuming the 90 days trading horizon 80 Mile Plc is expected to under-perform the Frontier Developments. In addition to that, 80 Mile is 1.05 times more volatile than Frontier Developments Plc. It trades about 0.0 of its total potential returns per unit of risk. Frontier Developments Plc is currently generating about 0.34 per unit of volatility. If you would invest  19,500  in Frontier Developments Plc on April 24, 2025 and sell it today you would earn a total of  17,850  from holding Frontier Developments Plc or generate 91.54% return on investment over 90 days.

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

80 Mile Plc  vs.  Frontier Developments Plc

80 Mile Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days 80 Mile Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, 80 Mile is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Frontier Developments Plc

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Developments Plc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Frontier Developments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 80 Mile and Frontier Developments

The main advantage of trading using opposite 80 Mile and Frontier Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 80 Mile position performs unexpectedly, Frontier Developments 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 Frontier Developments will offset losses from the drop in Frontier Developments' long position.

The idea behind 80 Mile Plc and Frontier Developments Plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.