Correlation Between FOM Technologies and Dataproces Group

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

By analyzing existing cross correlation between FOM Technologies AS and Dataproces Group AS, you can compare the effects of market volatilities on FOM Technologies and Dataproces Group 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 FOM Technologies with a short position of Dataproces Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOM Technologies and Dataproces Group.

Diversification Opportunities for FOM Technologies and Dataproces Group

0.37

Correlation Coefficient

FOM Technologies  Dataproces Group

Weak diversification

The 3 months correlation between FOM and Dataproces is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FOM Technologies AS and Dataproces Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dataproces Group and FOM Technologies 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 FOM Technologies AS are associated (or correlated) with Dataproces Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dataproces Group has no effect on the direction of FOM Technologies i.e., FOM Technologies and Dataproces Group go up and down completely randomly.

Pair Corralation between FOM Technologies and Dataproces Group

Assuming the 90 days trading horizon FOM Technologies is expected to generate 3.43 times less return on investment than Dataproces Group. In addition to that, FOM Technologies is 1.24 times more volatile than Dataproces Group AS. It trades about 0.04 of its total potential returns per unit of risk. Dataproces Group AS is currently generating about 0.19 per unit of volatility. If you would invest  595.00  in Dataproces Group AS on February 6, 2025 and sell it today you would earn a total of  273.00  from holding Dataproces Group AS or generate 45.88% return on investment over 90 days.

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

FOM Technologies AS  vs.  Dataproces Group AS

FOM Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FOM Technologies AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, FOM Technologies may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Dataproces Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dataproces Group AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dataproces Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FOM Technologies and Dataproces Group

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

The idea behind FOM Technologies AS and Dataproces Group AS 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.