Correlation Between Louisa Professional and FDC International
Can any of the company-specific risk be diversified away by investing in both Louisa Professional and FDC International 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 Louisa Professional and FDC International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisa Professional Coffee and FDC International Hotels, you can compare the effects of market volatilities on Louisa Professional and FDC International 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 Louisa Professional with a short position of FDC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisa Professional and FDC International.
Diversification Opportunities for Louisa Professional and FDC International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Louisa and FDC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Louisa Professional Coffee and FDC International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDC International Hotels and Louisa Professional 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 Louisa Professional Coffee are associated (or correlated) with FDC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDC International Hotels has no effect on the direction of Louisa Professional i.e., Louisa Professional and FDC International go up and down completely randomly.
Pair Corralation between Louisa Professional and FDC International
Assuming the 90 days trading horizon Louisa Professional Coffee is expected to under-perform the FDC International. But the stock apears to be less risky and, when comparing its historical volatility, Louisa Professional Coffee is 1.26 times less risky than FDC International. The stock trades about -0.11 of its potential returns per unit of risk. The FDC International Hotels is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 8,170 in FDC International Hotels on November 1, 2024 and sell it today you would lose (1,850) from holding FDC International Hotels or give up 22.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Louisa Professional Coffee vs. FDC International Hotels
Performance |
| Timeline |
| Louisa Professional |
| FDC International Hotels |
Louisa Professional and FDC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisa Professional and FDC International
The main advantage of trading using opposite Louisa Professional and FDC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisa Professional position performs unexpectedly, FDC International 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 FDC International will offset losses from the drop in FDC International's long position.The idea behind Louisa Professional Coffee and FDC International Hotels 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.
| FDC International vs. Formosa International Hotels | FDC International vs. My Humble House | FDC International vs. Wanhwa Enterprise Co | FDC International vs. Gourmet Master 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |