Correlation Between Falcon Power and Mirle Automation

Can any of the company-specific risk be diversified away by investing in both Falcon Power and Mirle Automation 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 Falcon Power and Mirle Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcon Power Co and Mirle Automation Corp, you can compare the effects of market volatilities on Falcon Power and Mirle Automation 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 Falcon Power with a short position of Mirle Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and Mirle Automation.

Diversification Opportunities for Falcon Power and Mirle Automation

0.58

Correlation Coefficient

Falcon Power  Mirle Automation

Very weak diversification

The 3 months correlation between Falcon and Mirle is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and Mirle Automation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirle Automation Corp and Falcon Power 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 Falcon Power Co are associated (or correlated) with Mirle Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirle Automation Corp has no effect on the direction of Falcon Power i.e., Falcon Power and Mirle Automation go up and down completely randomly.

Pair Corralation between Falcon Power and Mirle Automation

Assuming the 90 days trading horizon Falcon Power Co is expected to under-perform the Mirle Automation. But the stock apears to be less risky and, when comparing its historical volatility, Falcon Power Co is 1.16 times less risky than Mirle Automation. The stock trades about -0.14 of its potential returns per unit of risk. The Mirle Automation Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  8,400  in Mirle Automation Corp on October 20, 2024 and sell it today you would lose (1,220) from holding Mirle Automation Corp or give up 14.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Falcon Power Co  vs.  Mirle Automation Corp

Falcon Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Power Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mirle Automation Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirle Automation Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Falcon Power and Mirle Automation

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

The idea behind Falcon Power Co and Mirle Automation 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 CEOs Directory module to screen CEOs from public companies around the world.