Correlation Between BIO Key and First Pacific
Can any of the company-specific risk be diversified away by investing in both BIO Key and First Pacific 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 BIO Key and First Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BIO Key International and First Pacific, you can compare the effects of market volatilities on BIO Key and First Pacific 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 BIO Key with a short position of First Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIO Key and First Pacific.
Diversification Opportunities for BIO Key and First Pacific
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BIO and First is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BIO Key International and First Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Pacific and BIO Key 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 BIO Key International are associated (or correlated) with First Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Pacific has no effect on the direction of BIO Key i.e., BIO Key and First Pacific go up and down completely randomly.
Pair Corralation between BIO Key and First Pacific
Given the investment horizon of 90 days BIO Key International is expected to under-perform the First Pacific. But the stock apears to be less risky and, when comparing its historical volatility, BIO Key International is 1.07 times less risky than First Pacific. The stock trades about -0.01 of its potential returns per unit of risk. The First Pacific is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 27.00 in First Pacific on November 2, 2024 and sell it today you would earn a total of 26.00 from holding First Pacific or generate 96.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.34% |
| Values | Daily Returns |
BIO Key International vs. First Pacific
Performance |
| Timeline |
| BIO Key International |
| First Pacific |
BIO Key and First Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BIO Key and First Pacific
The main advantage of trading using opposite BIO Key and First Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIO Key position performs unexpectedly, First Pacific 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 First Pacific will offset losses from the drop in First Pacific's long position.| BIO Key vs. LogicMark | BIO Key vs. SSC Security Services | BIO Key vs. ICTS International NV | BIO Key vs. Senstar Technologies |
| First Pacific vs. BRF SA ADR | First Pacific vs. Flowers Foods | First Pacific vs. Premier Foods Plc | First Pacific vs. Torque Lifestyle Brands |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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