Correlation Between Franklin Wireless and LAir Liquide

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

By analyzing existing cross correlation between Franklin Wireless Corp and LAir Liquide SA, you can compare the effects of market volatilities on Franklin Wireless and LAir Liquide 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 Franklin Wireless with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and LAir Liquide.

Diversification Opportunities for Franklin Wireless and LAir Liquide

-0.44

Correlation Coefficient

Franklin Wireless  LAir Liquide

Very good diversification

The 3 months correlation between Franklin and LAir is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and Franklin Wireless 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 Franklin Wireless Corp are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and LAir Liquide go up and down completely randomly.

Pair Corralation between Franklin Wireless and LAir Liquide

Given the investment horizon of 90 days Franklin Wireless is expected to generate 1.07 times less return on investment than LAir Liquide. In addition to that, Franklin Wireless is 1.73 times more volatile than LAir Liquide SA. It trades about 0.02 of its total potential returns per unit of risk. LAir Liquide SA is currently generating about 0.03 per unit of volatility. If you would invest  13,815  in LAir Liquide SA on October 10, 2024 and sell it today you would earn a total of  2,542  from holding LAir Liquide SA or generate 18.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Franklin Wireless Corp  vs.  LAir Liquide SA

Franklin Wireless Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

LAir Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Franklin Wireless and LAir Liquide

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

The idea behind Franklin Wireless Corp and LAir Liquide SA 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.