Correlation Between FarGlory Hotel and IBF Financial
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and IBF Financial 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 IBF Financial 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 IBF Financial Holdings, you can compare the effects of market volatilities on FarGlory Hotel and IBF Financial 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 IBF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and IBF Financial.
Diversification Opportunities for FarGlory Hotel and IBF Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FarGlory and IBF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and IBF Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBF Financial Holdings 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 IBF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBF Financial Holdings has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and IBF Financial go up and down completely randomly.
Pair Corralation between FarGlory Hotel and IBF Financial
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the IBF Financial. In addition to that, FarGlory Hotel is 1.38 times more volatile than IBF Financial Holdings. It trades about -0.03 of its total potential returns per unit of risk. IBF Financial Holdings is currently generating about 0.05 per unit of volatility. If you would invest 1,140 in IBF Financial Holdings on August 30, 2024 and sell it today you would earn a total of 305.00 from holding IBF Financial Holdings or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. IBF Financial Holdings
Performance |
| Timeline |
| FarGlory Hotel |
| IBF Financial Holdings |
FarGlory Hotel and IBF Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and IBF Financial
The main advantage of trading using opposite FarGlory Hotel and IBF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, IBF Financial 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 IBF Financial will offset losses from the drop in IBF Financial's long position.| FarGlory Hotel vs. Ambassador Hotel | FarGlory Hotel vs. Lion Travel Service | FarGlory Hotel vs. First Hotel Co | FarGlory Hotel vs. FDC International Hotels |
| IBF Financial vs. Taiwan Secom Co | IBF Financial vs. TTET Union Corp | IBF Financial vs. China Steel Chemical | IBF Financial vs. Taiwan Shin Kong |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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