Correlation Between Double Bond and FDC International
Can any of the company-specific risk be diversified away by investing in both Double Bond and FDC International 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 Double Bond and FDC International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Double Bond Chemical and FDC International Hotels, you can compare the effects of market volatilities on Double Bond and FDC International 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 Double Bond with a short position of FDC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Double Bond and FDC International.
Diversification Opportunities for Double Bond and FDC International
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Double and FDC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Double Bond Chemical and FDC International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDC International Hotels and Double Bond 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 Double Bond Chemical are associated (or correlated) with FDC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDC International Hotels has no effect on the direction of Double Bond i.e., Double Bond and FDC International go up and down completely randomly.
Pair Corralation between Double Bond and FDC International
Assuming the 90 days trading horizon Double Bond Chemical is expected to under-perform the FDC International. But the stock apears to be less risky and, when comparing its historical volatility, Double Bond Chemical is 1.03 times less risky than FDC International. The stock trades about -0.26 of its potential returns per unit of risk. The FDC International Hotels is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,960 in FDC International Hotels on September 3, 2024 and sell it today you would earn a total of 210.00 from holding FDC International Hotels or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Double Bond Chemical vs. FDC International Hotels
Performance |
| Timeline |
| Double Bond Chemical |
| FDC International Hotels |
Double Bond and FDC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Double Bond and FDC International
The main advantage of trading using opposite Double Bond and FDC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Double Bond position performs unexpectedly, FDC International 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 FDC International will offset losses from the drop in FDC International's long position.| Double Bond vs. Delta Electronics | Double Bond vs. China Steel Chemical | Double Bond vs. WiseChip Semiconductor | Double Bond vs. Novatek Microelectronics Corp |
| FDC International vs. Tainan Spinning Co | FDC International vs. Chia Her Industrial | FDC International vs. WiseChip Semiconductor | FDC International vs. Novatek Microelectronics Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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