Correlation Between Firan Technology and Winpak

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

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

Diversification Opportunities for Firan Technology and Winpak

0.8

Correlation Coefficient

Firan Technology  Winpak

Very poor diversification

The 3 months correlation between Firan and Winpak is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak and Firan 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 Firan Technology Group are associated (or correlated) with Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Firan Technology i.e., Firan Technology and Winpak go up and down completely randomly.

Pair Corralation between Firan Technology and Winpak

Assuming the 90 days trading horizon Firan Technology Group is expected to generate 1.43 times more return on investment than Winpak. However, Firan Technology is 1.43 times more volatile than Winpak. It trades about 0.22 of its potential returns per unit of risk. Winpak is currently generating about 0.06 per unit of risk. If you would invest  581.00  in Firan Technology Group on September 26, 2024 and sell it today you would earn a total of  172.00  from holding Firan Technology Group or generate 29.6% return on investment over 90 days.

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

Firan Technology Group  vs.  Winpak

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 abnormal technical and fundamental indicators, Firan Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Winpak

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Winpak is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Firan Technology and Winpak

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

The idea behind Firan Technology Group and Winpak 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.