Correlation Between FarGlory Hotel and Lung Hwa
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Lung Hwa 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 Lung Hwa 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 Lung Hwa Electronics, you can compare the effects of market volatilities on FarGlory Hotel and Lung Hwa 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 Lung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Lung Hwa.
Diversification Opportunities for FarGlory Hotel and Lung Hwa
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FarGlory and Lung is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Lung Hwa Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lung Hwa Electronics 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 Lung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lung Hwa Electronics has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Lung Hwa go up and down completely randomly.
Pair Corralation between FarGlory Hotel and Lung Hwa
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the Lung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 2.19 times less risky than Lung Hwa. The stock trades about -0.05 of its potential returns per unit of risk. The Lung Hwa Electronics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,260 in Lung Hwa Electronics on August 24, 2024 and sell it today you would earn a total of 5,740 from holding Lung Hwa Electronics or generate 253.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. Lung Hwa Electronics
Performance |
| Timeline |
| FarGlory Hotel |
| Lung Hwa Electronics |
FarGlory Hotel and Lung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and Lung Hwa
The main advantage of trading using opposite FarGlory Hotel and Lung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Lung Hwa 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 Lung Hwa will offset losses from the drop in Lung Hwa's long position.| FarGlory Hotel vs. Ambassador Hotel | FarGlory Hotel vs. First Hotel Co | FarGlory Hotel vs. FDC International Hotels | FarGlory Hotel vs. Ruentex Development Co |
| Lung Hwa vs. Taiwan Semiconductor Manufacturing | Lung Hwa vs. Hon Hai Precision | Lung Hwa vs. MediaTek | Lung Hwa vs. Chunghwa Telecom 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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