Correlation Between FarGlory Hotel and Chang Type
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Chang Type 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 Chang Type 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 Chang Type Industrial, you can compare the effects of market volatilities on FarGlory Hotel and Chang Type 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 Chang Type. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Chang Type.
Diversification Opportunities for FarGlory Hotel and Chang Type
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FarGlory and Chang is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Chang Type Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chang Type Industrial 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 Chang Type. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chang Type Industrial has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Chang Type go up and down completely randomly.
Pair Corralation between FarGlory Hotel and Chang Type
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the Chang Type. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 1.12 times less risky than Chang Type. The stock trades about -0.08 of its potential returns per unit of risk. The Chang Type Industrial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,260 in Chang Type Industrial on October 22, 2024 and sell it today you would lose (660.00) from holding Chang Type Industrial or give up 20.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
FarGlory Hotel Co vs. Chang Type Industrial
Performance |
| Timeline |
| FarGlory Hotel |
| Chang Type Industrial |
FarGlory Hotel and Chang Type Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and Chang Type
The main advantage of trading using opposite FarGlory Hotel and Chang Type positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Chang Type 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 Chang Type will offset losses from the drop in Chang Type'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 |
| Chang Type vs. China Times Publishing | Chang Type vs. Aerospace Industrial Development | Chang Type vs. Shanghai Commercial Savings | Chang Type vs. ALFORMER Industrial 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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