Correlation Between Firan Technology and Monument Mining
Can any of the company-specific risk be diversified away by investing in both Firan Technology and Monument Mining 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 Monument Mining 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 Monument Mining Limited, you can compare the effects of market volatilities on Firan Technology and Monument Mining 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 Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firan Technology and Monument Mining.
Diversification Opportunities for Firan Technology and Monument Mining
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Firan and Monument is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining 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 Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Firan Technology i.e., Firan Technology and Monument Mining go up and down completely randomly.
Pair Corralation between Firan Technology and Monument Mining
Assuming the 90 days trading horizon Firan Technology is expected to generate 1.73 times less return on investment than Monument Mining. But when comparing it to its historical volatility, Firan Technology Group is 2.2 times less risky than Monument Mining. It trades about 0.11 of its potential returns per unit of risk. Monument Mining Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Monument Mining Limited on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Monument Mining Limited or generate 180.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firan Technology Group vs. Monument Mining Limited
Performance |
| Timeline |
| Firan Technology |
| Monument Mining |
Firan Technology and Monument Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firan Technology and Monument Mining
The main advantage of trading using opposite Firan Technology and Monument Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firan Technology position performs unexpectedly, Monument Mining 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 Monument Mining will offset losses from the drop in Monument Mining's long position.| Firan Technology vs. Hammond Power Solutions | Firan Technology vs. Questor Technology | Firan Technology vs. Vecima Networks | Firan Technology vs. Magellan Aerospace |
| Monument Mining vs. First Majestic Silver | Monument Mining vs. Ivanhoe Energy | Monument Mining vs. Orezone Gold Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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