Correlation Between Firstwave Cloud and Autosports

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

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

Diversification Opportunities for Firstwave Cloud and Autosports

0.81

Correlation Coefficient

Firstwave Cloud  Autosports

Very poor diversification

The 3 months correlation between Firstwave and Autosports is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Firstwave Cloud Technology and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Firstwave Cloud 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 Firstwave Cloud Technology are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Firstwave Cloud i.e., Firstwave Cloud and Autosports go up and down completely randomly.

Pair Corralation between Firstwave Cloud and Autosports

Assuming the 90 days trading horizon Firstwave Cloud Technology is expected to generate 2.47 times more return on investment than Autosports. However, Firstwave Cloud is 2.47 times more volatile than Autosports Group. It trades about 0.13 of its potential returns per unit of risk. Autosports Group is currently generating about -0.17 per unit of risk. If you would invest  2.10  in Firstwave Cloud Technology on October 11, 2024 and sell it today you would earn a total of  0.20  from holding Firstwave Cloud Technology or generate 9.52% return on investment over 90 days.

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

Firstwave Cloud Technology  vs.  Autosports Group

Firstwave Cloud Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Autosports Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autosports Group 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 technical and fundamental 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.

Pair Trading with Firstwave Cloud and Autosports

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

The idea behind Firstwave Cloud Technology and Autosports 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.