Correlation Between Firan Technology and Thales SA
Can any of the company-specific risk be diversified away by investing in both Firan Technology and Thales SA 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 Thales SA 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 Thales SA, you can compare the effects of market volatilities on Firan Technology and Thales SA 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firan Technology and Thales SA.
Diversification Opportunities for Firan Technology and Thales SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Firan and Thales is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of Firan Technology i.e., Firan Technology and Thales SA go up and down completely randomly.
Pair Corralation between Firan Technology and Thales SA
Assuming the 90 days horizon Firan Technology is expected to generate 1.46 times less return on investment than Thales SA. But when comparing it to its historical volatility, Firan Technology Group is 1.16 times less risky than Thales SA. It trades about 0.08 of its potential returns per unit of risk. Thales SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,836 in Thales SA on November 29, 2024 and sell it today you would earn a total of 7,329 from holding Thales SA or generate 57.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 33.27% |
| Values | Daily Returns |
Firan Technology Group vs. Thales SA
Performance |
| Timeline |
| Firan Technology |
| Thales SA |
Firan Technology and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firan Technology and Thales SA
The main advantage of trading using opposite Firan Technology and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firan Technology position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA's long position.| Firan Technology vs. 808 Renewable Energy | Firan Technology vs. Austal Limited | Firan Technology vs. Sky Harbour Group | Firan Technology vs. CPI Aerostructures |
| Thales SA vs. MTU Aero Engines | Thales SA vs. Singapore Technologies Engineering | Thales SA vs. Safran SA | Thales SA vs. Thales SA ADR |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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