Correlation Between Frost Growth and Firsthand Technology

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

By analyzing existing cross correlation between Frost Growth Equity and Firsthand Technology Opportunities, you can compare the effects of market volatilities on Frost Growth and Firsthand 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 Frost Growth with a short position of Firsthand Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Growth and Firsthand Technology.

Diversification Opportunities for Frost Growth and Firsthand Technology

-0.59

Correlation Coefficient

Frost Growth  Firsthand Technology

Excellent diversification

The 3 months correlation between Frost and Firsthand is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Frost Growth Equity and Firsthand Technology Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Technology and Frost Growth 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 Frost Growth Equity are associated (or correlated) with Firsthand Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Technology has no effect on the direction of Frost Growth i.e., Frost Growth and Firsthand Technology go up and down completely randomly.

Pair Corralation between Frost Growth and Firsthand Technology

Assuming the 90 days horizon Frost Growth Equity is expected to generate 0.64 times more return on investment than Firsthand Technology. However, Frost Growth Equity is 1.56 times less risky than Firsthand Technology. It trades about -0.04 of its potential returns per unit of risk. Firsthand Technology Opportunities is currently generating about -0.17 per unit of risk. If you would invest  1,588  in Frost Growth Equity on October 9, 2024 and sell it today you would lose (14.00) from holding Frost Growth Equity or give up 0.88% of portfolio value over 90 days.

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

Frost Growth Equity  vs.  Firsthand Technology Opportuni

Frost Growth Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frost Growth Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Firsthand Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Firsthand Technology Opportunities are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Firsthand Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Frost Growth and Firsthand Technology

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

The idea behind Frost Growth Equity and Firsthand Technology Opportunities 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.