Correlation Between Far Eastern and Run Long
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Run Long 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 Run Long 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 Run Long Construction, you can compare the effects of market volatilities on Far Eastern and Run Long 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 Run Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Run Long.
Diversification Opportunities for Far Eastern and Run Long
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Far and Run is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern Department and Run Long Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Run Long Construction 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 Run Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Run Long Construction has no effect on the direction of Far Eastern i.e., Far Eastern and Run Long go up and down completely randomly.
Pair Corralation between Far Eastern and Run Long
Assuming the 90 days trading horizon Far Eastern Department is expected to generate 0.35 times more return on investment than Run Long. However, Far Eastern Department is 2.83 times less risky than Run Long. It trades about 0.02 of its potential returns per unit of risk. Run Long Construction is currently generating about -0.01 per unit of risk. If you would invest 2,390 in Far Eastern Department on September 2, 2024 and sell it today you would earn a total of 130.00 from holding Far Eastern Department or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern Department vs. Run Long Construction
Performance |
| Timeline |
| Far Eastern Department |
| Run Long Construction |
Far Eastern and Run Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Run Long
The main advantage of trading using opposite Far Eastern and Run Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Run Long 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 Run Long will offset losses from the drop in Run Long's long position.| Far Eastern vs. Chaintech Technology Corp | Far Eastern vs. Avision | Far Eastern vs. Clevo Co | Far Eastern vs. Elitegroup Computer Systems |
| Run Long vs. BES Engineering Co | Run Long vs. Continental Holdings Corp | Run Long vs. Kee Tai Properties | Run Long vs. Hung Sheng Construction |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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