Correlation Between China Container and Farglory FTZ
Can any of the company-specific risk be diversified away by investing in both China Container 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 China Container and Farglory FTZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Container Terminal and Farglory FTZ Investment, you can compare the effects of market volatilities on China Container 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 China Container with a short position of Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Container and Farglory FTZ.
Diversification Opportunities for China Container and Farglory FTZ
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Farglory is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding China Container Terminal 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 China Container 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 China Container Terminal 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 China Container i.e., China Container and Farglory FTZ go up and down completely randomly.
Pair Corralation between China Container and Farglory FTZ
Assuming the 90 days trading horizon China Container Terminal is expected to generate 1.81 times more return on investment than Farglory FTZ. However, China Container is 1.81 times more volatile than Farglory FTZ Investment. It trades about -0.01 of its potential returns per unit of risk. Farglory FTZ Investment is currently generating about -0.09 per unit of risk. If you would invest 3,825 in China Container Terminal on August 26, 2024 and sell it today you would lose (355.00) from holding China Container Terminal or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Container Terminal vs. Farglory FTZ Investment
Performance |
| Timeline |
| China Container Terminal |
| Farglory FTZ Investment |
China Container and Farglory FTZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Container and Farglory FTZ
The main advantage of trading using opposite China Container and Farglory FTZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Container 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.| China Container vs. Sincere Navigation Corp | China Container vs. Evergreen International Storage | China Container vs. Tze Shin International | China Container vs. First Steamship Co |
| Farglory FTZ vs. Evergreen International Storage | Farglory FTZ vs. China Container Terminal | Farglory FTZ vs. Sincere Navigation Corp | Farglory FTZ vs. CSBC Corp Taiwan |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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