Correlation Between Farstarcap Investment and UPS CDR

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

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

Diversification Opportunities for Farstarcap Investment and UPS CDR

0.11

Correlation Coefficient

Farstarcap Investment  UPS CDR

Average diversification

The 3 months correlation between Farstarcap and UPS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Farstarcap Investment Corp and UPS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPS CDR and Farstarcap Investment 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 Farstarcap Investment Corp are associated (or correlated) with UPS CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPS CDR has no effect on the direction of Farstarcap Investment i.e., Farstarcap Investment and UPS CDR go up and down completely randomly.

Pair Corralation between Farstarcap Investment and UPS CDR

Assuming the 90 days trading horizon Farstarcap Investment Corp is expected to generate 0.59 times more return on investment than UPS CDR. However, Farstarcap Investment Corp is 1.69 times less risky than UPS CDR. It trades about -0.13 of its potential returns per unit of risk. UPS CDR is currently generating about -0.09 per unit of risk. If you would invest  5.00  in Farstarcap Investment Corp on December 25, 2024 and sell it today you would lose (0.50) from holding Farstarcap Investment Corp or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Farstarcap Investment Corp  vs.  UPS CDR

Farstarcap Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farstarcap Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

UPS CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days UPS CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Farstarcap Investment and UPS CDR

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

The idea behind Farstarcap Investment Corp and UPS CDR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .