Correlation Between Absolute Capital and Firsthand Alternative

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

By analyzing existing cross correlation between Absolute Capital Asset and Firsthand Alternative Energy, you can compare the effects of market volatilities on Absolute Capital and Firsthand Alternative 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 Absolute Capital with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Capital and Firsthand Alternative.

Diversification Opportunities for Absolute Capital and Firsthand Alternative

0.6

Correlation Coefficient

Absolute Capital  Firsthand Alternative

Poor diversification

The 3 months correlation between Absolute and Firsthand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Capital Asset and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative and Absolute Capital 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 Absolute Capital Asset are associated (or correlated) with Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Absolute Capital i.e., Absolute Capital and Firsthand Alternative go up and down completely randomly.

Pair Corralation between Absolute Capital and Firsthand Alternative

Assuming the 90 days horizon Absolute Capital is expected to generate 3.32 times less return on investment than Firsthand Alternative. But when comparing it to its historical volatility, Absolute Capital Asset is 2.51 times less risky than Firsthand Alternative. It trades about 0.28 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  791.00  in Firsthand Alternative Energy on April 30, 2025 and sell it today you would earn a total of  293.00  from holding Firsthand Alternative Energy or generate 37.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Absolute Capital Asset  vs.  Firsthand Alternative Energy

Absolute Capital Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Capital Asset are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Absolute Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Firsthand Alternative

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Firsthand Alternative Energy are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Firsthand Alternative showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Absolute Capital and Firsthand Alternative

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

The idea behind Absolute Capital Asset and Firsthand Alternative Energy 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.

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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.