Correlation Between FGI Industries and Energy Focu

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

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

Diversification Opportunities for FGI Industries and Energy Focu

0.15

Correlation Coefficient

FGI Industries  Energy Focu

Average diversification

The 3 months correlation between FGI and Energy is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FGI Industries and Energy Focu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Focu and FGI Industries 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 FGI Industries are associated (or correlated) with Energy Focu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Focu has no effect on the direction of FGI Industries i.e., FGI Industries and Energy Focu go up and down completely randomly.

Pair Corralation between FGI Industries and Energy Focu

Considering the 90-day investment horizon FGI Industries is expected to under-perform the Energy Focu. In addition to that, FGI Industries is 1.62 times more volatile than Energy Focu. It trades about -0.14 of its total potential returns per unit of risk. Energy Focu is currently generating about -0.01 per unit of volatility. If you would invest  153.00  in Energy Focu on January 29, 2024 and sell it today you would lose (3.00) from holding Energy Focu or give up 1.96% of portfolio value over 90 days.

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

FGI Industries  vs.  Energy Focu

FGI Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FGI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Energy Focu

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FGI Industries and Energy Focu

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

The idea behind FGI Industries and Energy Focu 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.