Correlation Between Chang Hwa and Farglory FTZ
Can any of the company-specific risk be diversified away by investing in both Chang Hwa and Farglory FTZ 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 Chang Hwa and Farglory FTZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chang Hwa Commercial and Farglory FTZ Investment, you can compare the effects of market volatilities on Chang Hwa and Farglory FTZ 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 Chang Hwa with a short position of Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chang Hwa and Farglory FTZ.
Diversification Opportunities for Chang Hwa and Farglory FTZ
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chang and Farglory is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Chang Hwa Commercial and Farglory FTZ Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory FTZ Investment and Chang Hwa 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 Chang Hwa Commercial are associated (or correlated) with Farglory FTZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory FTZ Investment has no effect on the direction of Chang Hwa i.e., Chang Hwa and Farglory FTZ go up and down completely randomly.
Pair Corralation between Chang Hwa and Farglory FTZ
Assuming the 90 days trading horizon Chang Hwa Commercial is expected to generate 0.46 times more return on investment than Farglory FTZ. However, Chang Hwa Commercial is 2.17 times less risky than Farglory FTZ. It trades about -0.02 of its potential returns per unit of risk. Farglory FTZ Investment is currently generating about -0.09 per unit of risk. If you would invest 1,815 in Chang Hwa Commercial on September 1, 2024 and sell it today you would lose (55.00) from holding Chang Hwa Commercial or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chang Hwa Commercial vs. Farglory FTZ Investment
Performance |
| Timeline |
| Chang Hwa Commercial |
| Farglory FTZ Investment |
Chang Hwa and Farglory FTZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chang Hwa and Farglory FTZ
The main advantage of trading using opposite Chang Hwa and Farglory FTZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chang Hwa position performs unexpectedly, Farglory FTZ 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 Farglory FTZ will offset losses from the drop in Farglory FTZ's long position.| Chang Hwa vs. Central Reinsurance Corp | Chang Hwa vs. Huaku Development Co | Chang Hwa vs. Fubon Financial Holding |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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