Correlation Between Pason Systems and First National

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

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

Diversification Opportunities for Pason Systems and First National

-0.28

Correlation Coefficient

Pason Systems  First National

Very good diversification

The 3 months correlation between Pason and First is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pason Systems and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Pason Systems 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 Pason Systems are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Pason Systems i.e., Pason Systems and First National go up and down completely randomly.

Pair Corralation between Pason Systems and First National

Assuming the 90 days trading horizon Pason Systems is expected to under-perform the First National. But the stock apears to be less risky and, when comparing its historical volatility, Pason Systems is 1.21 times less risky than First National. The stock trades about -0.02 of its potential returns per unit of risk. The First National Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,734  in First National Financial on May 17, 2025 and sell it today you would earn a total of  1,092  from holding First National Financial or generate 29.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Pason Systems  vs.  First National Financial

Pason Systems

Risk-Adjusted Performance

Weakest

Over the last 90 days Pason Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Pason Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First National Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First National displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pason Systems and First National

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

The idea behind Pason Systems and First National Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.