Correlation Between Falcon Metals and Steamships Trading

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

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

Diversification Opportunities for Falcon Metals and Steamships Trading

0.64

Correlation Coefficient

Falcon Metals  Steamships Trading

Poor diversification

The 3 months correlation between Falcon and Steamships is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Steamships Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steamships Trading and Falcon Metals 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 Metals are associated (or correlated) with Steamships Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steamships Trading has no effect on the direction of Falcon Metals i.e., Falcon Metals and Steamships Trading go up and down completely randomly.

Pair Corralation between Falcon Metals and Steamships Trading

Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Steamships Trading. In addition to that, Falcon Metals is 35.76 times more volatile than Steamships Trading. It trades about -0.11 of its total potential returns per unit of risk. Steamships Trading is currently generating about -0.22 per unit of volatility. If you would invest  1,390  in Steamships Trading on October 4, 2024 and sell it today you would lose (10.00) from holding Steamships Trading or give up 0.72% of portfolio value over 90 days.

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

Falcon Metals  vs.  Steamships Trading

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Steamships Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steamships Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Steamships Trading is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Falcon Metals and Steamships Trading

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

The idea behind Falcon Metals and Steamships Trading 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.