Correlation Between International CSRC and Farglory FTZ
Can any of the company-specific risk be diversified away by investing in both International CSRC and Farglory FTZ 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 International CSRC and Farglory FTZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International CSRC Investment and Farglory FTZ Investment, you can compare the effects of market volatilities on International CSRC and Farglory FTZ 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 International CSRC with a short position of Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of International CSRC and Farglory FTZ.
Diversification Opportunities for International CSRC and Farglory FTZ
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Farglory is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding International CSRC Investment and Farglory FTZ Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory FTZ Investment and International CSRC 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 International CSRC Investment are associated (or correlated) with Farglory FTZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory FTZ Investment has no effect on the direction of International CSRC i.e., International CSRC and Farglory FTZ go up and down completely randomly.
Pair Corralation between International CSRC and Farglory FTZ
Assuming the 90 days trading horizon International CSRC Investment is expected to under-perform the Farglory FTZ. But the stock apears to be less risky and, when comparing its historical volatility, International CSRC Investment is 1.78 times less risky than Farglory FTZ. The stock trades about -0.05 of its potential returns per unit of risk. The Farglory FTZ Investment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,350 in Farglory FTZ Investment on August 26, 2024 and sell it today you would lose (910.00) from holding Farglory FTZ Investment or give up 17.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International CSRC Investment vs. Farglory FTZ Investment
Performance |
| Timeline |
| International CSRC |
| Farglory FTZ Investment |
International CSRC and Farglory FTZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International CSRC and Farglory FTZ
The main advantage of trading using opposite International CSRC and Farglory FTZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International CSRC position performs unexpectedly, Farglory FTZ 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 FTZ will offset losses from the drop in Farglory FTZ's long position.| International CSRC vs. Cheng Shin Rubber | International CSRC vs. Taiwan Cement Corp | International CSRC vs. China Steel Chemical | International CSRC vs. Yulon Motor Co |
| Farglory FTZ vs. Sunny Friend Environmental | Farglory FTZ vs. TTET Union Corp | Farglory FTZ vs. ECOVE Environment Corp | Farglory FTZ vs. Yulon Finance 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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