Correlation Between BCE and Firan Technology

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

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

Diversification Opportunities for BCE and Firan Technology

-0.43

Correlation Coefficient

BCE  Firan Technology

Very good diversification

The 3 months correlation between BCE and Firan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc Pref and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology and BCE 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 BCE Inc Pref are associated (or correlated) with Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of BCE i.e., BCE and Firan Technology go up and down completely randomly.

Pair Corralation between BCE and Firan Technology

Assuming the 90 days trading horizon BCE Inc Pref is expected to generate 0.61 times more return on investment than Firan Technology. However, BCE Inc Pref is 1.65 times less risky than Firan Technology. It trades about 0.53 of its potential returns per unit of risk. Firan Technology Group is currently generating about 0.11 per unit of risk. If you would invest  1,610  in BCE Inc Pref on October 26, 2024 and sell it today you would earn a total of  133.00  from holding BCE Inc Pref or generate 8.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

BCE Inc Pref  vs.  Firan Technology Group

BCE Inc Pref

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc Pref are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, BCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Firan Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firan Technology Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Firan Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BCE and Firan Technology

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

The idea behind BCE Inc Pref and Firan Technology Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..