Correlation Between Ras Technology and FireFly Metals

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

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

Diversification Opportunities for Ras Technology and FireFly Metals

-0.22

Correlation Coefficient

Ras Technology  FireFly Metals

Very good diversification

The 3 months correlation between Ras and FireFly is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ras Technology Holdings and FireFly Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFly Metals and Ras 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 Ras Technology Holdings are associated (or correlated) with FireFly Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFly Metals has no effect on the direction of Ras Technology i.e., Ras Technology and FireFly Metals go up and down completely randomly.

Pair Corralation between Ras Technology and FireFly Metals

Assuming the 90 days trading horizon Ras Technology Holdings is expected to under-perform the FireFly Metals. In addition to that, Ras Technology is 1.25 times more volatile than FireFly Metals. It trades about -0.05 of its total potential returns per unit of risk. FireFly Metals is currently generating about 0.1 per unit of volatility. If you would invest  91.00  in FireFly Metals on December 20, 2024 and sell it today you would earn a total of  17.00  from holding FireFly Metals or generate 18.68% return on investment over 90 days.

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

Ras Technology Holdings  vs.  FireFly Metals

Ras Technology Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ras Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FireFly Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FireFly Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, FireFly Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ras Technology and FireFly Metals

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

The idea behind Ras Technology Holdings and FireFly 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.