Correlation Between First Copper and Founding Construction

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

By analyzing existing cross correlation between First Copper Technology and Founding Construction Development, you can compare the effects of market volatilities on First Copper and Founding Construction 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 First Copper with a short position of Founding Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Copper and Founding Construction.

Diversification Opportunities for First Copper and Founding Construction

0.28

Correlation Coefficient

First Copper  Founding Construction

Modest diversification

The 3 months correlation between First and Founding is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Copper Technology and Founding Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Founding Construction and First Copper 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 First Copper Technology are associated (or correlated) with Founding Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Founding Construction has no effect on the direction of First Copper i.e., First Copper and Founding Construction go up and down completely randomly.

Pair Corralation between First Copper and Founding Construction

Assuming the 90 days trading horizon First Copper Technology is expected to generate 1.91 times more return on investment than Founding Construction. However, First Copper is 1.91 times more volatile than Founding Construction Development. It trades about -0.02 of its potential returns per unit of risk. Founding Construction Development is currently generating about -0.08 per unit of risk. If you would invest  4,100  in First Copper Technology on September 14, 2024 and sell it today you would lose (180.00) from holding First Copper Technology or give up 4.39% of portfolio value over 90 days.

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

First Copper Technology  vs.  Founding Construction Developm

First Copper Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Copper Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, First Copper is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Founding Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Founding Construction Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Founding Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Copper and Founding Construction

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

The idea behind First Copper Technology and Founding Construction Development 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.