Correlation Between Firan Technology and BII Railway
Can any of the company-specific risk be diversified away by investing in both Firan Technology and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Firan Technology and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firan Technology and BII Railway.
Diversification Opportunities for Firan Technology and BII Railway
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Firan and BII is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Firan Technology i.e., Firan Technology and BII Railway go up and down completely randomly.
Pair Corralation between Firan Technology and BII Railway
Assuming the 90 days trading horizon Firan Technology Group is expected to under-perform the BII Railway. But the stock apears to be less risky and, when comparing its historical volatility, Firan Technology Group is 1.26 times less risky than BII Railway. The stock trades about -0.11 of its potential returns per unit of risk. The BII Railway Transportation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2.65 in BII Railway Transportation on October 13, 2024 and sell it today you would earn a total of 0.10 from holding BII Railway Transportation or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firan Technology Group vs. BII Railway Transportation
Performance |
| Timeline |
| Firan Technology |
| BII Railway Transpor |
Firan Technology and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firan Technology and BII Railway
The main advantage of trading using opposite Firan Technology and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firan Technology position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Firan Technology vs. MICRONIC MYDATA | Firan Technology vs. NTT DATA | Firan Technology vs. MPH Health Care | Firan Technology vs. China Datang |
| BII Railway vs. Firan Technology Group | BII Railway vs. Major Drilling Group | BII Railway vs. Kingdee International Software | BII Railway vs. FANDIFI TECHNOLOGY P |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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