Correlation Between Tecom and Far Eastern
Can any of the company-specific risk be diversified away by investing in both Tecom and Far Eastern 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 Tecom and Far Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tecom Co and Far Eastern New, you can compare the effects of market volatilities on Tecom and Far Eastern 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 Tecom with a short position of Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tecom and Far Eastern.
Diversification Opportunities for Tecom and Far Eastern
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tecom and Far is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tecom Co and Far Eastern New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern New and Tecom 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 Tecom Co are associated (or correlated) with Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern New has no effect on the direction of Tecom i.e., Tecom and Far Eastern go up and down completely randomly.
Pair Corralation between Tecom and Far Eastern
Assuming the 90 days trading horizon Tecom Co is expected to generate 7.41 times more return on investment than Far Eastern. However, Tecom is 7.41 times more volatile than Far Eastern New. It trades about 0.04 of its potential returns per unit of risk. Far Eastern New is currently generating about 0.02 per unit of risk. If you would invest 605.00 in Tecom Co on August 30, 2024 and sell it today you would earn a total of 955.00 from holding Tecom Co or generate 157.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tecom Co vs. Far Eastern New
Performance |
| Timeline |
| Tecom |
| Far Eastern New |
Tecom and Far Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tecom and Far Eastern
The main advantage of trading using opposite Tecom and Far Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tecom position performs unexpectedly, Far Eastern 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 Far Eastern will offset losses from the drop in Far Eastern's long position.| Tecom vs. Microelectronics Technology | Tecom vs. D Link Corp | Tecom vs. CMC Magnetics Corp | Tecom vs. Accton Technology Corp |
| Far Eastern vs. Yulon Motor Co | Far Eastern vs. Far Eastern Department | Far Eastern vs. China Steel Corp | Far Eastern vs. Chang Hwa Commercial |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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