Correlation Between Far Eastern and Falcon Power
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Falcon Power 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 Far Eastern and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern Department and Falcon Power Co, you can compare the effects of market volatilities on Far Eastern and Falcon Power 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 Far Eastern with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Falcon Power.
Diversification Opportunities for Far Eastern and Falcon Power
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Far and Falcon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern Department and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and Far Eastern 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 Far Eastern Department are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of Far Eastern i.e., Far Eastern and Falcon Power go up and down completely randomly.
Pair Corralation between Far Eastern and Falcon Power
Assuming the 90 days trading horizon Far Eastern Department is expected to generate 0.65 times more return on investment than Falcon Power. However, Far Eastern Department is 1.54 times less risky than Falcon Power. It trades about 0.02 of its potential returns per unit of risk. Falcon Power Co is currently generating about -0.01 per unit of risk. If you would invest 2,295 in Far Eastern Department on November 27, 2024 and sell it today you would earn a total of 175.00 from holding Far Eastern Department or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Far Eastern Department vs. Falcon Power Co
Performance |
| Timeline |
| Far Eastern Department |
| Falcon Power |
Far Eastern and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Falcon Power
The main advantage of trading using opposite Far Eastern and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| Far Eastern vs. Yulon Motor Co | Far Eastern vs. Chang Hwa Commercial | Far Eastern vs. Sinopac Financial Holdings | Far Eastern vs. Taiwan Glass Ind |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |