Correlation Between First International and Sarine Technologies

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

By analyzing existing cross correlation between First International Bank and Sarine Technologies, you can compare the effects of market volatilities on First International and Sarine Technologies 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 International with a short position of Sarine Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of First International and Sarine Technologies.

Diversification Opportunities for First International and Sarine Technologies

-0.53

Correlation Coefficient

First International  Sarine Technologies

Excellent diversification

The 3 months correlation between First and Sarine is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding First International Bank and Sarine Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarine Technologies and First 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 First International Bank are associated (or correlated) with Sarine Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarine Technologies has no effect on the direction of First International i.e., First International and Sarine Technologies go up and down completely randomly.

Pair Corralation between First International and Sarine Technologies

Assuming the 90 days trading horizon First International Bank is expected to generate 0.61 times more return on investment than Sarine Technologies. However, First International Bank is 1.64 times less risky than Sarine Technologies. It trades about 0.05 of its potential returns per unit of risk. Sarine Technologies is currently generating about -0.03 per unit of risk. If you would invest  1,278,544  in First International Bank on September 28, 2024 and sell it today you would earn a total of  463,456  from holding First International Bank or generate 36.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

First International Bank  vs.  Sarine Technologies

First International Bank

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First International Bank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First International sustained solid returns over the last few months and may actually be approaching a breakup point.

Sarine Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarine Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with First International and Sarine Technologies

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

The idea behind First International Bank and Sarine Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.