Correlation Between International Business and First Resource

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

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

Diversification Opportunities for International Business and First Resource

0.29

Correlation Coefficient

International Business  First Resource

Modest diversification

The 3 months correlation between International and First is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and First Resource Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Resource Bank and International Business 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 International Business Machines are associated (or correlated) with First Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Resource Bank has no effect on the direction of International Business i.e., International Business and First Resource go up and down completely randomly.

Pair Corralation between International Business and First Resource

Considering the 90-day investment horizon International Business is expected to generate 9.33 times less return on investment than First Resource. In addition to that, International Business is 1.13 times more volatile than First Resource Bank. It trades about 0.02 of its total potential returns per unit of risk. First Resource Bank is currently generating about 0.19 per unit of volatility. If you would invest  1,475  in First Resource Bank on May 3, 2025 and sell it today you would earn a total of  255.00  from holding First Resource Bank or generate 17.29% return on investment over 90 days.

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

International Business Machine  vs.  First Resource Bank

International Business

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 15 (%) 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.

Pair Trading with International Business and First Resource

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

The idea behind International Business Machines and First Resource Bank 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 Global Correlations module to find global opportunities by holding instruments from different markets.