Correlation Between Franklin Wireless and PAR Technology

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Can any of the company-specific risk be diversified away by investing in both Franklin Wireless and PAR Technology 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 Franklin Wireless and PAR Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Wireless Corp and PAR Technology, you can compare the effects of market volatilities on Franklin Wireless and PAR Technology 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 Franklin Wireless with a short position of PAR Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Wireless and PAR Technology.

Diversification Opportunities for Franklin Wireless and PAR Technology

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Franklin and PAR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Wireless Corp and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology and Franklin Wireless 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 Franklin Wireless Corp are associated (or correlated) with PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of Franklin Wireless i.e., Franklin Wireless and PAR Technology go up and down completely randomly.

Pair Corralation between Franklin Wireless and PAR Technology

Given the investment horizon of 90 days Franklin Wireless is expected to generate 2.35 times less return on investment than PAR Technology. In addition to that, Franklin Wireless is 1.36 times more volatile than PAR Technology. It trades about 0.07 of its total potential returns per unit of risk. PAR Technology is currently generating about 0.21 per unit of volatility. If you would invest  4,934  in PAR Technology on June 9, 2024 and sell it today you would earn a total of  336.00  from holding PAR Technology or generate 6.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Wireless Corp  vs.  PAR Technology

 Performance 
       Timeline  
Franklin Wireless Corp 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.
PAR Technology 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PAR Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, PAR Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Franklin Wireless and PAR Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Wireless and PAR Technology

The main advantage of trading using opposite Franklin Wireless and PAR Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Wireless position performs unexpectedly, PAR Technology 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 PAR Technology will offset losses from the drop in PAR Technology's long position.
The idea behind Franklin Wireless Corp and PAR Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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