Correlation Between FarGlory Hotel and Zinwell
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Zinwell 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 Zinwell 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 Zinwell, you can compare the effects of market volatilities on FarGlory Hotel and Zinwell 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 Zinwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Zinwell.
Diversification Opportunities for FarGlory Hotel and Zinwell
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FarGlory and Zinwell is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell 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 Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Zinwell go up and down completely randomly.
Pair Corralation between FarGlory Hotel and Zinwell
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the Zinwell. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 1.13 times less risky than Zinwell. The stock trades about -0.11 of its potential returns per unit of risk. The Zinwell is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,775 in Zinwell on August 31, 2024 and sell it today you would lose (75.00) from holding Zinwell or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. Zinwell
Performance |
| Timeline |
| FarGlory Hotel |
| Zinwell |
FarGlory Hotel and Zinwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and Zinwell
The main advantage of trading using opposite FarGlory Hotel and Zinwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Zinwell 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 Zinwell will offset losses from the drop in Zinwell'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 |
| Zinwell vs. United Microelectronics | Zinwell vs. Winbond Electronics Corp | Zinwell vs. Macronix International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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