Correlation Between Franklin Wireless and BLACK

Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and BLACK 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 BLACK 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 BLACK HILLS P, you can compare the effects of market volatilities on Franklin Wireless and BLACK 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 BLACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and BLACK.

Diversification Opportunities for Franklin Wireless and BLACK

-0.77

Correlation Coefficient

Franklin Wireless  BLACK

Pay attention - limited upside

The 3 months correlation between Franklin and BLACK is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and BLACK go up and down completely randomly.

Pair Corralation between Franklin Wireless and BLACK

Given the investment horizon of 90 days Franklin Wireless Corp is expected to generate 18.78 times more return on investment than BLACK. However, Franklin Wireless is 18.78 times more volatile than BLACK HILLS P. It trades about 0.23 of its potential returns per unit of risk. BLACK HILLS P is currently generating about -0.16 per unit of risk. If you would invest  437.00  in Franklin Wireless Corp on October 10, 2024 and sell it today you would earn a total of  57.00  from holding Franklin Wireless Corp or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

Franklin Wireless Corp  vs.  BLACK HILLS P

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.

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Franklin Wireless and BLACK

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

The idea behind Franklin Wireless Corp and BLACK HILLS P 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.