Correlation Between First Pacific and Fraser

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

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

Diversification Opportunities for First Pacific and Fraser

0.57

Correlation Coefficient

First Pacific  Fraser

Very weak diversification

The 3 months correlation between First and Fraser is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Pacific and Fraser and Neave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fraser and Neave and First Pacific 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 Pacific are associated (or correlated) with Fraser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fraser and Neave has no effect on the direction of First Pacific i.e., First Pacific and Fraser go up and down completely randomly.

Pair Corralation between First Pacific and Fraser

Assuming the 90 days horizon First Pacific is expected to generate 1.57 times less return on investment than Fraser. In addition to that, First Pacific is 1.36 times more volatile than Fraser and Neave. It trades about 0.05 of its total potential returns per unit of risk. Fraser and Neave is currently generating about 0.12 per unit of volatility. If you would invest  91.00  in Fraser and Neave on September 4, 2024 and sell it today you would earn a total of  21.00  from holding Fraser and Neave or generate 23.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

First Pacific  vs.  Fraser and Neave

First Pacific

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Pacific are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, First Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Fraser and Neave

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fraser and Neave are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Fraser reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Pacific and Fraser

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

The idea behind First Pacific and Fraser and Neave 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.