Correlation Between CARYSIL and First Trust

Can any of the company-specific risk be diversified away by investing in both CARYSIL and First Trust 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 CARYSIL and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CARYSIL LIMITED and First Trust Consumer, you can compare the effects of market volatilities on CARYSIL and First Trust 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 CARYSIL with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARYSIL and First Trust.

Diversification Opportunities for CARYSIL and First Trust

-0.03

Correlation Coefficient

CARYSIL  First Trust

Good diversification

The 3 months correlation between CARYSIL and First is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CARYSIL LIMITED and First Trust Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Consumer and CARYSIL 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 CARYSIL LIMITED are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Consumer has no effect on the direction of CARYSIL i.e., CARYSIL and First Trust go up and down completely randomly.

Pair Corralation between CARYSIL and First Trust

Assuming the 90 days trading horizon CARYSIL LIMITED is expected to under-perform the First Trust. In addition to that, CARYSIL is 2.44 times more volatile than First Trust Consumer. It trades about -0.22 of its total potential returns per unit of risk. First Trust Consumer is currently generating about -0.13 per unit of volatility. If you would invest  6,714  in First Trust Consumer on February 5, 2024 and sell it today you would lose (135.00) from holding First Trust Consumer or give up 2.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

CARYSIL LIMITED  vs.  First Trust Consumer

CARYSIL LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARYSIL LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CARYSIL is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

First Trust Consumer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Consumer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CARYSIL and First Trust

The main advantage of trading using opposite CARYSIL and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARYSIL position performs unexpectedly, First Trust 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 Trust will offset losses from the drop in First Trust's long position.

The idea behind CARYSIL LIMITED and First Trust Consumer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stocks Directory module to find actively traded stocks across global markets.