Correlation Between FarGlory Hotel and HOYA Resort
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and HOYA Resort 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 HOYA Resort 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 HOYA Resort Hotel, you can compare the effects of market volatilities on FarGlory Hotel and HOYA Resort 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 HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and HOYA Resort.
Diversification Opportunities for FarGlory Hotel and HOYA Resort
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FarGlory and HOYA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel 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 HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and HOYA Resort go up and down completely randomly.
Pair Corralation between FarGlory Hotel and HOYA Resort
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the HOYA Resort. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 1.84 times less risky than HOYA Resort. The stock trades about -0.2 of its potential returns per unit of risk. The HOYA Resort Hotel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,120 in HOYA Resort Hotel on November 6, 2024 and sell it today you would earn a total of 85.00 from holding HOYA Resort Hotel or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. HOYA Resort Hotel
Performance |
| Timeline |
| FarGlory Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| HOYA Resort Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
FarGlory Hotel and HOYA Resort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and HOYA Resort
The main advantage of trading using opposite FarGlory Hotel and HOYA Resort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, HOYA Resort 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 HOYA Resort will offset losses from the drop in HOYA Resort's long position.The idea behind FarGlory Hotel Co and HOYA Resort Hotel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |