Correlation Between Far Eastern and Est Global
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Est Global 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 Far Eastern and Est Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern New and Est Global Apparel, you can compare the effects of market volatilities on Far Eastern and Est Global 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 Far Eastern with a short position of Est Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Est Global.
Diversification Opportunities for Far Eastern and Est Global
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Far and Est is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern New and Est Global Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Est Global Apparel and Far Eastern 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 Far Eastern New are associated (or correlated) with Est Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Est Global Apparel has no effect on the direction of Far Eastern i.e., Far Eastern and Est Global go up and down completely randomly.
Pair Corralation between Far Eastern and Est Global
Assuming the 90 days trading horizon Far Eastern is expected to generate 1.77 times less return on investment than Est Global. But when comparing it to its historical volatility, Far Eastern New is 1.38 times less risky than Est Global. It trades about 0.29 of its potential returns per unit of risk. Est Global Apparel is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,715 in Est Global Apparel on November 28, 2024 and sell it today you would earn a total of 145.00 from holding Est Global Apparel or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern New vs. Est Global Apparel
Performance |
| Timeline |
| Far Eastern New |
| Est Global Apparel |
Far Eastern and Est Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Est Global
The main advantage of trading using opposite Far Eastern and Est Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Est Global 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 Est Global will offset losses from the drop in Est Global's long position.| Far Eastern vs. Nan Ya Plastics | Far Eastern vs. Taiwan Cement Corp | Far Eastern vs. Formosa Plastics Corp | Far Eastern vs. Asia Cement Corp |
| Est Global vs. Farglory FTZ Investment | Est Global vs. Hunya Foods Co | Est Global vs. Mechema Chemicals Int | Est Global vs. Sports Gear Co |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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