Correlation Between FarGlory Hotel and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Kunyue Development 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 Kunyue Development 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 Kunyue Development Co, you can compare the effects of market volatilities on FarGlory Hotel and Kunyue Development 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 Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Kunyue Development.
Diversification Opportunities for FarGlory Hotel and Kunyue Development
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between FarGlory and Kunyue is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Kunyue Development go up and down completely randomly.
Pair Corralation between FarGlory Hotel and Kunyue Development
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the Kunyue Development. But the stock apears to be less risky and, when comparing its historical volatility, FarGlory Hotel Co is 1.88 times less risky than Kunyue Development. The stock trades about -0.06 of its potential returns per unit of risk. The Kunyue Development Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,200 in Kunyue Development Co on September 12, 2024 and sell it today you would lose (40.00) from holding Kunyue Development Co or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. Kunyue Development Co
Performance |
| Timeline |
| FarGlory Hotel |
| Kunyue Development |
FarGlory Hotel and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and Kunyue Development
The main advantage of trading using opposite FarGlory Hotel and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development'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 |
| Kunyue Development vs. Ma Kuang Healthcare | Kunyue Development vs. Fortune Information Systems | Kunyue Development vs. China Times Publishing | Kunyue Development vs. GameSparcs 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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