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 ADR, 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
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Firan and Thales is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA ADR 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 ADR 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 Group is expected to under-perform the Thales SA. In addition to that, Firan Technology is 1.28 times more volatile than Thales SA ADR. It trades about -0.06 of its total potential returns per unit of risk. Thales SA ADR is currently generating about 0.41 per unit of volatility. If you would invest 3,206 in Thales SA ADR on November 29, 2024 and sell it today you would earn a total of 773.00 from holding Thales SA ADR or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firan Technology Group vs. Thales SA ADR
Performance |
| Timeline |
| Firan Technology |
| Thales SA ADR |
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. Safran SA | Thales SA vs. Leonardo SpA ADR | Thales SA vs. Airbus Group NV |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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