Correlation Between First State and Caspian Services
Can any of the company-specific risk be diversified away by investing in both First State and Caspian Services 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 First State and Caspian Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First State Financial and Caspian Services, you can compare the effects of market volatilities on First State and Caspian Services 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 First State with a short position of Caspian Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of First State and Caspian Services.
Diversification Opportunities for First State and Caspian Services
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Caspian is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services and First State 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 First State Financial are associated (or correlated) with Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of First State i.e., First State and Caspian Services go up and down completely randomly.
Pair Corralation between First State and Caspian Services
Given the investment horizon of 90 days First State Financial is expected to generate 1.54 times more return on investment than Caspian Services. However, First State is 1.54 times more volatile than Caspian Services. It trades about 0.13 of its potential returns per unit of risk. Caspian Services is currently generating about 0.14 per unit of risk. If you would invest 1.65 in First State Financial on October 31, 2025 and sell it today you would earn a total of 0.45 from holding First State Financial or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
First State Financial vs. Caspian Services
Performance |
| Timeline |
| First State Financial |
| Caspian Services |
First State and Caspian Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First State and Caspian Services
The main advantage of trading using opposite First State and Caspian Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First State position performs unexpectedly, Caspian Services 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 Caspian Services will offset losses from the drop in Caspian Services' long position.| First State vs. First Republic Bank | First State vs. BioCube | First State vs. Trend Exploration I | First State vs. Eastern Goldfields |
| Caspian Services vs. Cal Dive International | Caspian Services vs. Liberty Energy Corp | Caspian Services vs. XXL Energy Corp | Caspian Services vs. Niko Resources |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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