Correlation Between First Tractor and First Pacific

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

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

Diversification Opportunities for First Tractor and First Pacific

0.0

Correlation Coefficient

First Tractor  First Pacific

Pay attention - limited upside

The 3 months correlation between First and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Tractor Co and First Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Pacific and First Tractor 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 Tractor Co are associated (or correlated) with First Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Pacific has no effect on the direction of First Tractor i.e., First Tractor and First Pacific go up and down completely randomly.

Pair Corralation between First Tractor and First Pacific

If you would invest  327.00  in First Pacific on May 1, 2025 and sell it today you would earn a total of  77.00  from holding First Pacific or generate 23.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	51.61%
Values	Daily Returns

First Tractor Co  vs.  First Pacific

First Tractor

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Tractor Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, First Tractor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Pacific

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Pacific are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, First Pacific showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Tractor and First Pacific

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

The idea behind First Tractor Co and First Pacific 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.