Correlation Between Far Eastern and Farglory FTZ
Can any of the company-specific risk be diversified away by investing in both Far Eastern 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 Far Eastern and Farglory FTZ 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 Farglory FTZ Investment, you can compare the effects of market volatilities on Far Eastern 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 Far Eastern with a short position of Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Farglory FTZ.
Diversification Opportunities for Far Eastern and Farglory FTZ
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Far and Farglory is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern Department 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 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 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 Far Eastern i.e., Far Eastern and Farglory FTZ go up and down completely randomly.
Pair Corralation between Far Eastern and Farglory FTZ
Assuming the 90 days trading horizon Far Eastern Department is expected to under-perform the Farglory FTZ. But the stock apears to be less risky and, when comparing its historical volatility, Far Eastern Department is 1.58 times less risky than Farglory FTZ. The stock trades about -0.18 of its potential returns per unit of risk. The Farglory FTZ Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,410 in Farglory FTZ Investment on August 29, 2024 and sell it today you would earn a total of 55.00 from holding Farglory FTZ Investment or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern Department vs. Farglory FTZ Investment
Performance |
| Timeline |
| Far Eastern Department |
| Farglory FTZ Investment |
Far Eastern and Farglory FTZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Farglory FTZ
The main advantage of trading using opposite Far Eastern and Farglory FTZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern 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.| Far Eastern vs. Yulon Motor Co | Far Eastern vs. Chang Hwa Commercial | Far Eastern vs. Sinopac Financial Holdings | Far Eastern vs. Taiwan Glass Ind |
| Farglory FTZ vs. Yulon Motor Co | Farglory FTZ vs. Far Eastern Department | Farglory FTZ vs. China Steel Corp | Farglory FTZ vs. Chang Hwa Commercial |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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