Correlation Between Far Eastern and Sincere Navigation
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Sincere Navigation 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 Sincere Navigation 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 Sincere Navigation Corp, you can compare the effects of market volatilities on Far Eastern and Sincere Navigation 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 Sincere Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Sincere Navigation.
Diversification Opportunities for Far Eastern and Sincere Navigation
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Far and Sincere is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern Department and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation Corp 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 Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of Far Eastern i.e., Far Eastern and Sincere Navigation go up and down completely randomly.
Pair Corralation between Far Eastern and Sincere Navigation
Assuming the 90 days trading horizon Far Eastern is expected to generate 2.84 times less return on investment than Sincere Navigation. But when comparing it to its historical volatility, Far Eastern Department is 1.87 times less risky than Sincere Navigation. It trades about 0.04 of its potential returns per unit of risk. Sincere Navigation Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,910 in Sincere Navigation Corp on August 26, 2024 and sell it today you would earn a total of 860.00 from holding Sincere Navigation Corp or generate 45.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern Department vs. Sincere Navigation Corp
Performance |
| Timeline |
| Far Eastern Department |
| Sincere Navigation Corp |
Far Eastern and Sincere Navigation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Sincere Navigation
The main advantage of trading using opposite Far Eastern and Sincere Navigation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Sincere Navigation 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 Sincere Navigation will offset losses from the drop in Sincere Navigation's long position.| Far Eastern vs. Taiwan Semiconductor Manufacturing | Far Eastern vs. Hon Hai Precision | Far Eastern vs. MediaTek | Far Eastern vs. Chunghwa Telecom Co |
| Sincere Navigation vs. U Ming Marine Transport | Sincere Navigation vs. First Steamship Co | Sincere Navigation vs. Evergreen International Storage | Sincere Navigation vs. Wan Hai Lines |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
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| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |