Correlation Between First Keystone and First IC

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

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

Diversification Opportunities for First Keystone and First IC

0.16

Correlation Coefficient

First Keystone  First IC

Average diversification

The 3 months correlation between First and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Keystone Corp and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC and First Keystone 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 First Keystone Corp are associated (or correlated) with First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of First Keystone i.e., First Keystone and First IC go up and down completely randomly.

Pair Corralation between First Keystone and First IC

Given the investment horizon of 90 days First Keystone is expected to generate 20.71 times less return on investment than First IC. But when comparing it to its historical volatility, First Keystone Corp is 2.08 times less risky than First IC. It trades about 0.02 of its potential returns per unit of risk. First IC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  930.00  in First IC on December 27, 2024 and sell it today you would earn a total of  795.00  from holding First IC or generate 85.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

First Keystone Corp  vs.  First IC

First Keystone Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Keystone Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First Keystone is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

First IC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First IC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, First IC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Keystone and First IC

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

The idea behind First Keystone Corp and First IC 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.