Correlation Between First Colombia and All American

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

By analyzing existing cross correlation between First Colombia Gold and All American Gld, you can compare the effects of market volatilities on First Colombia and All American 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 First Colombia with a short position of All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Colombia and All American.

Diversification Opportunities for First Colombia and All American

-0.27

Correlation Coefficient

First Colombia  All American

Very good diversification

The 3 months correlation between First and All is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Colombia Gold and All American Gld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Gld and First Colombia 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 First Colombia Gold are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Gld has no effect on the direction of First Colombia i.e., First Colombia and All American go up and down completely randomly.

Pair Corralation between First Colombia and All American

Given the investment horizon of 90 days First Colombia Gold is expected to generate 25.18 times more return on investment than All American. However, First Colombia is 25.18 times more volatile than All American Gld. It trades about 0.37 of its potential returns per unit of risk. All American Gld is currently generating about 0.01 per unit of risk. If you would invest  0.00  in First Colombia Gold on May 3, 2025 and sell it today you would earn a total of  0.01  from holding First Colombia Gold or generate 9.223372036854776E16% return on investment over 90 days.

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

First Colombia Gold  vs.  All American Gld

First Colombia Gold

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Colombia Gold are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, First Colombia exhibited solid returns over the last few months and may actually be approaching a breakup point.

All American Gld

Risk-Adjusted Performance

Very Weak

Over the last 90 days All American Gld has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather conflicting technical and fundamental indicators, All American may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Colombia and All American

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

The idea behind First Colombia Gold and All American Gld 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.