Correlation Between Firan Technology and Amazon CDR

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

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

Diversification Opportunities for Firan Technology and Amazon CDR

0.73

Correlation Coefficient

Firan Technology  Amazon CDR

Poor diversification

The 3 months correlation between Firan and Amazon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Firan Technology 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 Firan Technology Group are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Firan Technology i.e., Firan Technology and Amazon CDR go up and down completely randomly.

Pair Corralation between Firan Technology and Amazon CDR

Assuming the 90 days trading horizon Firan Technology Group is expected to generate 1.1 times more return on investment than Amazon CDR. However, Firan Technology is 1.1 times more volatile than Amazon CDR. It trades about 0.23 of its potential returns per unit of risk. Amazon CDR is currently generating about 0.2 per unit of risk. If you would invest  582.00  in Firan Technology Group on September 13, 2024 and sell it today you would earn a total of  173.00  from holding Firan Technology Group or generate 29.73% return on investment over 90 days.

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

Firan Technology Group  vs.  Amazon CDR

Firan Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Firan Technology Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Firan Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Amazon CDR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Firan Technology and Amazon CDR

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

The idea behind Firan Technology Group and Amazon 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.