Correlation Between Romana Food and Franklin Wireless

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

By analyzing existing cross correlation between Romana Food Brands and Franklin Wireless Corp, you can compare the effects of market volatilities on Romana Food and Franklin Wireless 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 Romana Food with a short position of Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romana Food and Franklin Wireless.

Diversification Opportunities for Romana Food and Franklin Wireless

0.0

Correlation Coefficient

Romana Food  Franklin Wireless

Pay attention - limited upside

The 3 months correlation between Romana and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Romana Food Brands and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and Romana Food 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 Romana Food Brands are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Romana Food i.e., Romana Food and Franklin Wireless go up and down completely randomly.

Pair Corralation between Romana Food and Franklin Wireless

If you would invest  503.00  in Franklin Wireless Corp on October 24, 2024 and sell it today you would lose (11.00) from holding Franklin Wireless Corp or give up 2.19% of portfolio value over 90 days.

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

Romana Food Brands  vs.  Franklin Wireless Corp

Romana Food Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Romana Food Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Romana Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Franklin Wireless Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Romana Food and Franklin Wireless

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

The idea behind Romana Food Brands and Franklin Wireless Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.