Correlation Between First State and Queen City

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

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

Diversification Opportunities for First State and Queen City

0.86

Correlation Coefficient

First State  Queen City

Very poor diversification

The 3 months correlation between First and Queen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and Queen City Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queen City Investments and First State 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 State Financial are associated (or correlated) with Queen City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queen City Investments has no effect on the direction of First State i.e., First State and Queen City go up and down completely randomly.

Pair Corralation between First State and Queen City

If you would invest  144,500  in Queen City Investments on September 14, 2024 and sell it today you would earn a total of  4,000  from holding Queen City Investments or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

First State Financial  vs.  Queen City Investments

First State Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First State Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First State is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Queen City Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Queen City Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Queen City is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First State and Queen City

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

The idea behind First State Financial and Queen City Investments 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.