Correlation Between Firan Technology and Flowers Foods

Can any of the company-specific risk be diversified away by investing in both Firan Technology and Flowers Foods 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 Firan Technology and Flowers Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Firan Technology and Flowers Foods

0.11

Correlation Coefficient

Firan Technology  Flowers Foods

Average diversification

The 3 months correlation between Firan and Flowers is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods and Firan Technology 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 Firan Technology Group are associated (or correlated) with Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Firan Technology i.e., Firan Technology and Flowers Foods go up and down completely randomly.

Pair Corralation between Firan Technology and Flowers Foods

Assuming the 90 days trading horizon Firan Technology Group is expected to under-perform the Flowers Foods. But the stock apears to be less risky and, when comparing its historical volatility, Firan Technology Group is 1.37 times less risky than Flowers Foods. The stock trades about -0.14 of its potential returns per unit of risk. The Flowers Foods is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,060  in Flowers Foods on October 10, 2024 and sell it today you would lose (40.00) from holding Flowers Foods or give up 1.94% of portfolio value over 90 days.

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

Firan Technology Group  vs.  Flowers Foods

Firan Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firan Technology Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Firan Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Flowers Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Firan Technology and Flowers Foods

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

The idea behind Firan Technology Group and Flowers Foods 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.