Correlation Between First State and First Colombia
Can any of the company-specific risk be diversified away by investing in both First State and First Colombia 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 First Colombia 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 First Colombia Gold, you can compare the effects of market volatilities on First State and First Colombia 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 First Colombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of First State and First Colombia.
Diversification Opportunities for First State and First Colombia
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial and First Colombia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Colombia Gold 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 First Colombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Colombia Gold has no effect on the direction of First State i.e., First State and First Colombia go up and down completely randomly.
Pair Corralation between First State and First Colombia
Given the investment horizon of 90 days First State is expected to generate 2.68 times less return on investment than First Colombia. But when comparing it to its historical volatility, First State Financial is 3.42 times less risky than First Colombia. It trades about 0.14 of its potential returns per unit of risk. First Colombia Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.01 in First Colombia Gold on October 3, 2025 and sell it today you would lose (0.01) from holding First Colombia Gold or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.64% |
| Values | Daily Returns |
First State Financial vs. First Colombia Gold
Performance |
| Timeline |
| First State Financial |
| First Colombia Gold |
First State and First Colombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First State and First Colombia
The main advantage of trading using opposite First State and First Colombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First State position performs unexpectedly, First Colombia 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 Colombia will offset losses from the drop in First Colombia's long position.| First State vs. Previsto International Holdings | First State vs. Global Quest | First State vs. Sortis Holdings | First State vs. Vector 21 Holdings |
| First Colombia vs. Worldwide Holdings Corp | First Colombia vs. Foodfest Intl 2000 | First Colombia vs. BioCube | First Colombia vs. Trend Exploration I |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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