Correlation Between Resilient Property and Frontier Transport

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

By analyzing existing cross correlation between Resilient Property Income and Frontier Transport Holdings, you can compare the effects of market volatilities on Resilient Property and Frontier Transport 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 Resilient Property with a short position of Frontier Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resilient Property and Frontier Transport.

Diversification Opportunities for Resilient Property and Frontier Transport

-0.13

Correlation Coefficient

Resilient Property  Frontier Transport

Good diversification

The 3 months correlation between Resilient and Frontier is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Resilient Property Income and Frontier Transport Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Transport and Resilient Property 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 Resilient Property Income are associated (or correlated) with Frontier Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Transport has no effect on the direction of Resilient Property i.e., Resilient Property and Frontier Transport go up and down completely randomly.

Pair Corralation between Resilient Property and Frontier Transport

Assuming the 90 days trading horizon Resilient Property is expected to generate 9.03 times less return on investment than Frontier Transport. But when comparing it to its historical volatility, Resilient Property Income is 4.57 times less risky than Frontier Transport. It trades about 0.02 of its potential returns per unit of risk. Frontier Transport Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  73,927  in Frontier Transport Holdings on September 15, 2024 and sell it today you would earn a total of  3,073  from holding Frontier Transport Holdings or generate 4.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Resilient Property Income  vs.  Frontier Transport Holdings

Resilient Property Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Resilient Property Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Resilient Property is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Frontier Transport

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Transport Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Frontier Transport may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Resilient Property and Frontier Transport

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

The idea behind Resilient Property Income and Frontier Transport Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.