Correlation Between Firan Technology and Austal

Can any of the company-specific risk be diversified away by investing in both Firan Technology and Austal 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 Austal 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 Austal Limited, you can compare the effects of market volatilities on Firan Technology and Austal 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 Austal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firan Technology and Austal.

Diversification Opportunities for Firan Technology and Austal

0.46

Correlation Coefficient

Firan Technology  Austal

Very weak diversification

The 3 months correlation between Firan and Austal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Austal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austal Limited 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 Austal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austal Limited has no effect on the direction of Firan Technology i.e., Firan Technology and Austal go up and down completely randomly.

Pair Corralation between Firan Technology and Austal

Assuming the 90 days horizon Firan Technology is expected to generate 2.73 times less return on investment than Austal. But when comparing it to its historical volatility, Firan Technology Group is 2.27 times less risky than Austal. It trades about 0.11 of its potential returns per unit of risk. Austal Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Austal Limited on September 4, 2024 and sell it today you would earn a total of  58.00  from holding Austal Limited or generate 38.67% return on investment over 90 days.

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

Firan Technology Group  vs.  Austal Limited

Firan Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firan Technology Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Firan Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Austal Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austal Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Austal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Firan Technology and Austal

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

The idea behind Firan Technology Group and Austal Limited 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.