Correlation Between FirstService Corp and Alset Ehome

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

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

Diversification Opportunities for FirstService Corp and Alset Ehome

0.09

Correlation Coefficient

FirstService Corp  Alset Ehome

Significant diversification

The 3 months correlation between FirstService and Alset is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Alset Ehome International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alset Ehome International and FirstService Corp 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 FirstService Corp are associated (or correlated) with Alset Ehome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alset Ehome International has no effect on the direction of FirstService Corp i.e., FirstService Corp and Alset Ehome go up and down completely randomly.

Pair Corralation between FirstService Corp and Alset Ehome

Considering the 90-day investment horizon FirstService Corp is expected to under-perform the Alset Ehome. But the stock apears to be less risky and, when comparing its historical volatility, FirstService Corp is 5.94 times less risky than Alset Ehome. The stock trades about -0.08 of its potential returns per unit of risk. The Alset Ehome International is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Alset Ehome International on December 29, 2024 and sell it today you would lose (23.00) from holding Alset Ehome International or give up 18.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FirstService Corp  vs.  Alset Ehome International

FirstService Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FirstService Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting 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.

Alset Ehome International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alset Ehome International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Alset Ehome is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FirstService Corp and Alset Ehome

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

The idea behind FirstService Corp and Alset Ehome International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.