Correlation Between Steward Large and Firsthand Technology

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

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

Diversification Opportunities for Steward Large and Firsthand Technology

0.96

Correlation Coefficient

Steward Large  Firsthand Technology

Almost no diversification

The 3 months correlation between Steward and Firsthand is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Steward Large Cap and Firsthand Technology Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Technology and Steward Large 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 Steward Large Cap are associated (or correlated) with Firsthand Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Technology has no effect on the direction of Steward Large i.e., Steward Large and Firsthand Technology go up and down completely randomly.

Pair Corralation between Steward Large and Firsthand Technology

Assuming the 90 days horizon Steward Large is expected to generate 5.91 times less return on investment than Firsthand Technology. But when comparing it to its historical volatility, Steward Large Cap is 3.96 times less risky than Firsthand Technology. It trades about 0.08 of its potential returns per unit of risk. Firsthand Technology Opportunities is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  390.00  in Firsthand Technology Opportunities on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Firsthand Technology Opportunities or generate 4.1% return on investment over 90 days.

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

Steward Large Cap  vs.  Firsthand Technology Opportuni

Steward Large Cap

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Steward Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Steward Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Firsthand Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Firsthand Technology Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Firsthand Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steward Large and Firsthand Technology

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

The idea behind Steward Large Cap and Firsthand Technology Opportunities 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.