Correlation Between FarGlory Hotel and Falcon Power
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Falcon Power 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 FarGlory Hotel and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FarGlory Hotel Co and Falcon Power Co, you can compare the effects of market volatilities on FarGlory Hotel and Falcon Power 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 FarGlory Hotel with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Falcon Power.
Diversification Opportunities for FarGlory Hotel and Falcon Power
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FarGlory and Falcon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and FarGlory Hotel 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 FarGlory Hotel Co are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Falcon Power go up and down completely randomly.
Pair Corralation between FarGlory Hotel and Falcon Power
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the Falcon Power. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 1.72 times less risky than Falcon Power. The stock trades about -0.1 of its potential returns per unit of risk. The Falcon Power Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,735 in Falcon Power Co on September 1, 2024 and sell it today you would earn a total of 45.00 from holding Falcon Power Co or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. Falcon Power Co
Performance |
| Timeline |
| FarGlory Hotel |
| Falcon Power |
FarGlory Hotel and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and Falcon Power
The main advantage of trading using opposite FarGlory Hotel and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| FarGlory Hotel vs. Ambassador Hotel | FarGlory Hotel vs. Lion Travel Service | FarGlory Hotel vs. Chateau International Development | FarGlory Hotel vs. First Hotel Co |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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