Correlation Between Perpetual Credit and FOS Capital

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

By analyzing existing cross correlation between Perpetual Credit Income and FOS Capital, you can compare the effects of market volatilities on Perpetual Credit and FOS Capital 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 Perpetual Credit with a short position of FOS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perpetual Credit and FOS Capital.

Diversification Opportunities for Perpetual Credit and FOS Capital

0.31

Correlation Coefficient

Perpetual Credit  FOS Capital

Weak diversification

The 3 months correlation between Perpetual and FOS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Perpetual Credit Income and FOS Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOS Capital and Perpetual Credit 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 Perpetual Credit Income are associated (or correlated) with FOS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOS Capital has no effect on the direction of Perpetual Credit i.e., Perpetual Credit and FOS Capital go up and down completely randomly.

Pair Corralation between Perpetual Credit and FOS Capital

Assuming the 90 days trading horizon Perpetual Credit is expected to generate 1.4 times less return on investment than FOS Capital. But when comparing it to its historical volatility, Perpetual Credit Income is 2.69 times less risky than FOS Capital. It trades about 0.06 of its potential returns per unit of risk. FOS Capital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  31.00  in FOS Capital on April 22, 2025 and sell it today you would earn a total of  1.00  from holding FOS Capital or generate 3.23% return on investment over 90 days.

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

Perpetual Credit Income  vs.  FOS Capital

Perpetual Credit Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Credit Income are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Perpetual Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FOS Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FOS Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FOS Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Perpetual Credit and FOS Capital

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

The idea behind Perpetual Credit Income and FOS Capital 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.

Check out your portfolio center.

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.