Correlation Between Taiwan Fertilizer and Farglory Land
Can any of the company-specific risk be diversified away by investing in both Taiwan Fertilizer 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 Taiwan Fertilizer and Farglory Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Fertilizer Co and Farglory Land Development, you can compare the effects of market volatilities on Taiwan Fertilizer 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 Taiwan Fertilizer with a short position of Farglory Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Fertilizer and Farglory Land.
Diversification Opportunities for Taiwan Fertilizer and Farglory Land
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Farglory is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fertilizer Co 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 Taiwan Fertilizer 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 Taiwan Fertilizer Co 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 Taiwan Fertilizer i.e., Taiwan Fertilizer and Farglory Land go up and down completely randomly.
Pair Corralation between Taiwan Fertilizer and Farglory Land
Assuming the 90 days trading horizon Taiwan Fertilizer Co is expected to under-perform the Farglory Land. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Fertilizer Co is 2.06 times less risky than Farglory Land. The stock trades about -0.09 of its potential returns per unit of risk. The Farglory Land Development is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,130 in Farglory Land Development on September 5, 2024 and sell it today you would lose (230.00) from holding Farglory Land Development or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Fertilizer Co vs. Farglory Land Development
Performance |
| Timeline |
| Taiwan Fertilizer |
| Farglory Land Development |
Taiwan Fertilizer and Farglory Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Fertilizer and Farglory Land
The main advantage of trading using opposite Taiwan Fertilizer and Farglory Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Fertilizer 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.| Taiwan Fertilizer vs. Taiwan Cement Corp | Taiwan Fertilizer vs. Far Eastern New | Taiwan Fertilizer vs. Asia Cement Corp | Taiwan Fertilizer vs. Formosa Plastics Corp |
| Farglory Land vs. Highwealth Construction Corp | Farglory Land vs. Huaku Development Co | Farglory Land vs. Chong Hong Construction | Farglory Land vs. Taiwan Fertilizer 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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