Correlation Between Chi Hua and Farglory Land
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Farglory Land 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 Chi Hua and Farglory Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Hua Fitness and Farglory Land Development, you can compare the effects of market volatilities on Chi Hua and Farglory Land 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 Chi Hua with a short position of Farglory Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Farglory Land.
Diversification Opportunities for Chi Hua and Farglory Land
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chi and Farglory is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Farglory Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory Land Development and Chi Hua 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 Chi Hua Fitness are associated (or correlated) with Farglory Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory Land Development has no effect on the direction of Chi Hua i.e., Chi Hua and Farglory Land go up and down completely randomly.
Pair Corralation between Chi Hua and Farglory Land
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Farglory Land. But the stock apears to be less risky and, when comparing its historical volatility, Chi Hua Fitness is 2.67 times less risky than Farglory Land. The stock trades about -0.08 of its potential returns per unit of risk. The Farglory Land Development is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,650 in Farglory Land Development on September 1, 2024 and sell it today you would lose (100.00) from holding Farglory Land Development or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chi Hua Fitness vs. Farglory Land Development
Performance |
| Timeline |
| Chi Hua Fitness |
| Farglory Land Development |
Chi Hua and Farglory Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Farglory Land
The main advantage of trading using opposite Chi Hua and Farglory Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Farglory Land 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 Farglory Land will offset losses from the drop in Farglory Land's long position.| Chi Hua vs. Giant Manufacturing Co | Chi Hua vs. Merida Industry Co | Chi Hua vs. Johnson Health Tech | Chi Hua vs. Power Wind Health |
| Farglory Land vs. Ruentex Development Co | Farglory Land vs. CTCI Corp | Farglory Land vs. Information Technology Total | Farglory Land vs. Ennoconn Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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