Correlation Between Income Financial and Firan Technology

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

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

Diversification Opportunities for Income Financial and Firan Technology

0.75

Correlation Coefficient

Income Financial  Firan Technology

Poor diversification

The 3 months correlation between Income and Firan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Income Financial Trust and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology and Income Financial 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 Income Financial Trust are associated (or correlated) with Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of Income Financial i.e., Income Financial and Firan Technology go up and down completely randomly.

Pair Corralation between Income Financial and Firan Technology

Assuming the 90 days trading horizon Income Financial Trust is expected to under-perform the Firan Technology. But the stock apears to be less risky and, when comparing its historical volatility, Income Financial Trust is 1.37 times less risky than Firan Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Firan Technology Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  719.00  in Firan Technology Group on December 23, 2024 and sell it today you would earn a total of  2.00  from holding Firan Technology Group or generate 0.28% return on investment over 90 days.

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

Income Financial Trust  vs.  Firan Technology Group

Income Financial Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Income Financial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Income Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Firan Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Firan Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Firan Technology is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Income Financial and Firan Technology

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

The idea behind Income Financial Trust and Firan Technology Group 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..