Correlation Between Foraco International and Firan Technology

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

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

Diversification Opportunities for Foraco International and Firan Technology

0.26

Correlation Coefficient

Foraco International  Firan Technology

Modest diversification

The 3 months correlation between Foraco and Firan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Foraco International SA and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology and Foraco International 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 Foraco International SA 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 Foraco International i.e., Foraco International and Firan Technology go up and down completely randomly.

Pair Corralation between Foraco International and Firan Technology

Assuming the 90 days trading horizon Foraco International is expected to generate 2.86 times less return on investment than Firan Technology. In addition to that, Foraco International is 1.53 times more volatile than Firan Technology Group. It trades about 0.05 of its total potential returns per unit of risk. Firan Technology Group is currently generating about 0.22 per unit of volatility. If you would invest  562.00  in Firan Technology Group on September 20, 2024 and sell it today you would earn a total of  166.00  from holding Firan Technology Group or generate 29.54% return on investment over 90 days.

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

Foraco International SA  vs.  Firan Technology Group

Foraco International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foraco International SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Foraco International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Firan Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Firan Technology Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Firan Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foraco International and Firan Technology

The main advantage of trading using opposite Foraco International and Firan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foraco International 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 Foraco International SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.