Correlation Between FarGlory Hotel and X Legend
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and X Legend 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 X Legend 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 X Legend Entertainment Co, you can compare the effects of market volatilities on FarGlory Hotel and X Legend 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 X Legend. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and X Legend.
Diversification Opportunities for FarGlory Hotel and X Legend
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FarGlory and 4994 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and X Legend Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Legend Entertainment 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 X Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Legend Entertainment has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and X Legend go up and down completely randomly.
Pair Corralation between FarGlory Hotel and X Legend
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the X Legend. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 1.11 times less risky than X Legend. The stock trades about -0.09 of its potential returns per unit of risk. The X Legend Entertainment Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 12,300 in X Legend Entertainment Co on August 25, 2024 and sell it today you would lose (1,600) from holding X Legend Entertainment Co or give up 13.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
FarGlory Hotel Co vs. X Legend Entertainment Co
Performance |
| Timeline |
| FarGlory Hotel |
| X Legend Entertainment |
FarGlory Hotel and X Legend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and X Legend
The main advantage of trading using opposite FarGlory Hotel and X Legend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, X Legend 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 X Legend will offset losses from the drop in X Legend'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 |
| X Legend vs. Abnova Taiwan Corp | X Legend vs. Cheng Mei Materials | X Legend vs. BizLink Holding | X Legend vs. Lemtech Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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