Correlation Between Falcons Beyond and 51Talk Online

Can any of the company-specific risk be diversified away by investing in both Falcons Beyond and 51Talk Online 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 Falcons Beyond and 51Talk Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcons Beyond Global, and 51Talk Online Education, you can compare the effects of market volatilities on Falcons Beyond and 51Talk Online 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 Falcons Beyond with a short position of 51Talk Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcons Beyond and 51Talk Online.

Diversification Opportunities for Falcons Beyond and 51Talk Online

0.36

Correlation Coefficient

Falcons Beyond  51Talk Online

Weak diversification

The 3 months correlation between Falcons and 51Talk is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and 51Talk Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 51Talk Online Education and Falcons Beyond 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 Falcons Beyond Global, are associated (or correlated) with 51Talk Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 51Talk Online Education has no effect on the direction of Falcons Beyond i.e., Falcons Beyond and 51Talk Online go up and down completely randomly.

Pair Corralation between Falcons Beyond and 51Talk Online

Given the investment horizon of 90 days Falcons Beyond is expected to generate 4.69 times less return on investment than 51Talk Online. In addition to that, Falcons Beyond is 1.48 times more volatile than 51Talk Online Education. It trades about 0.02 of its total potential returns per unit of risk. 51Talk Online Education is currently generating about 0.12 per unit of volatility. If you would invest  1,442  in 51Talk Online Education on October 3, 2024 and sell it today you would earn a total of  608.00  from holding 51Talk Online Education or generate 42.16% return on investment over 90 days.

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

Falcons Beyond Global,  vs.  51Talk Online Education

Falcons Beyond Global,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Falcons Beyond may actually be approaching a critical reversion point that can send shares even higher in February 2025.

51Talk Online Education

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, 51Talk Online exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcons Beyond and 51Talk Online

The main advantage of trading using opposite Falcons Beyond and 51Talk Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcons Beyond position performs unexpectedly, 51Talk Online 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 51Talk Online will offset losses from the drop in 51Talk Online's long position.

The idea behind Falcons Beyond Global, and 51Talk Online Education 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.