Correlation Between First Pacific and First Pacific

Can any of the company-specific risk be diversified away by investing in both First Pacific 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 Pacific 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 Pacific and First Pacific, you can compare the effects of market volatilities on First Pacific 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 Pacific with a short position of First Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Pacific and First Pacific.

Diversification Opportunities for First Pacific and First Pacific

0.79

Correlation Coefficient

First Pacific  First Pacific

Poor diversification

The 3 months correlation between First and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding First Pacific and First Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Pacific and First Pacific 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 Pacific 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 Pacific i.e., First Pacific and First Pacific go up and down completely randomly.

Pair Corralation between First Pacific and First Pacific

Assuming the 90 days horizon First Pacific is expected to generate 1.2 times less return on investment than First Pacific. But when comparing it to its historical volatility, First Pacific is 1.98 times less risky than First Pacific. It trades about 0.12 of its potential returns per unit of risk. First Pacific is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  68.00  in First Pacific on May 2, 2025 and sell it today you would earn a total of  9.00  from holding First Pacific or generate 13.24% return on investment over 90 days.

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

First Pacific  vs.  First Pacific

First Pacific

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Pacific are ranked lower than 9 (%) 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.

First Pacific

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Pacific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, First Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Pacific and First Pacific

The main advantage of trading using opposite First Pacific and First Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Pacific 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 Pacific 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.