Correlation Between FarGlory Hotel and Delta Asia
Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Delta Asia 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 Delta Asia 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 Delta Asia International, you can compare the effects of market volatilities on FarGlory Hotel and Delta Asia 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 Delta Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Delta Asia.
Diversification Opportunities for FarGlory Hotel and Delta Asia
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FarGlory and Delta is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Delta Asia International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Asia International 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 Delta Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Asia International has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Delta Asia go up and down completely randomly.
Pair Corralation between FarGlory Hotel and Delta Asia
Assuming the 90 days trading horizon FarGlory Hotel Co is expected to under-perform the Delta Asia. In addition to that, FarGlory Hotel is 1.12 times more volatile than Delta Asia International. It trades about -0.03 of its total potential returns per unit of risk. Delta Asia International is currently generating about 0.03 per unit of volatility. If you would invest 23,404 in Delta Asia International on November 5, 2024 and sell it today you would earn a total of 3,896 from holding Delta Asia International or generate 16.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FarGlory Hotel Co vs. Delta Asia International
Performance |
| Timeline |
| FarGlory Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Delta Asia International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FarGlory Hotel and Delta Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FarGlory Hotel and Delta Asia
The main advantage of trading using opposite FarGlory Hotel and Delta Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Delta Asia 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 Delta Asia will offset losses from the drop in Delta Asia's long position.The idea behind FarGlory Hotel Co and Delta Asia International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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