Correlation Between Ferrexpo PLC and First

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

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

Diversification Opportunities for Ferrexpo PLC and First

0.1

Correlation Coefficient

Ferrexpo PLC  First

Average diversification

The 3 months correlation between Ferrexpo and First is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and First go up and down completely randomly.

Pair Corralation between Ferrexpo PLC and First

Assuming the 90 days trading horizon Ferrexpo PLC is expected to under-perform the First. In addition to that, Ferrexpo PLC is 1.3 times more volatile than First Class Metals. It trades about -0.08 of its total potential returns per unit of risk. First Class Metals is currently generating about -0.05 per unit of volatility. If you would invest  180.00  in First Class Metals on December 24, 2024 and sell it today you would lose (45.00) from holding First Class Metals or give up 25.0% of portfolio value over 90 days.

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

Ferrexpo PLC  vs.  First Class Metals

Ferrexpo PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferrexpo PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

First Class Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Class Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ferrexpo PLC and First

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

The idea behind Ferrexpo PLC and First Class Metals 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.