Correlation Between First Resource and First IC

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

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

Diversification Opportunities for First Resource and First IC

0.69

Correlation Coefficient

First Resource  First IC

Poor diversification

The 3 months correlation between First and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Resource Bank and First IC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First IC and First Resource 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 Resource Bank are associated (or correlated) with First IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First IC has no effect on the direction of First Resource i.e., First Resource and First IC go up and down completely randomly.

Pair Corralation between First Resource and First IC

Given the investment horizon of 90 days First Resource Bank is expected to generate 1.04 times more return on investment than First IC. However, First Resource is 1.04 times more volatile than First IC. It trades about 0.17 of its potential returns per unit of risk. First IC is currently generating about 0.15 per unit of risk. If you would invest  1,476  in First Resource Bank on May 7, 2025 and sell it today you would earn a total of  224.00  from holding First Resource Bank or generate 15.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

First Resource Bank  vs.  First IC

First Resource Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Resource Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Resource sustained solid returns over the last few months and may actually be approaching a breakup point.

First IC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First IC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, First IC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Resource and First IC

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

The idea behind First Resource Bank and First IC 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .