Correlation Between F M and Flow Capital

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

By analyzing existing cross correlation between F M Bank and Flow Capital Corp, you can compare the effects of market volatilities on F M and Flow 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 F M with a short position of Flow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of F M and Flow Capital.

Diversification Opportunities for F M and Flow Capital

0.0

Correlation Coefficient

F M  Flow Capital

Pay attention - limited upside

The 3 months correlation between FMBM and Flow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding F M Bank and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and F M 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 F M Bank are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of F M i.e., F M and Flow Capital go up and down completely randomly.

Pair Corralation between F M and Flow Capital

If you would invest  2,109  in F M Bank on July 1, 2025 and sell it today you would earn a total of  475.00  from holding F M Bank or generate 22.52% return on investment over 90 days.

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

F M Bank  vs.  Flow Capital Corp

F M Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in F M Bank are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, F M displayed solid returns over the last few months and may actually be approaching a breakup point.

Flow Capital Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Flow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with F M and Flow Capital

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

The idea behind F M Bank and Flow Capital Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.