Correlation Between Far EasTone and Standard Foods
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Standard Foods 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 EasTone and Standard Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far EasTone Telecommunications and Standard Foods Corp, you can compare the effects of market volatilities on Far EasTone and Standard Foods 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 EasTone with a short position of Standard Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Standard Foods.
Diversification Opportunities for Far EasTone and Standard Foods
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Far and Standard is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Standard Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Foods Corp and Far EasTone 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 EasTone Telecommunications are associated (or correlated) with Standard Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Foods Corp has no effect on the direction of Far EasTone i.e., Far EasTone and Standard Foods go up and down completely randomly.
Pair Corralation between Far EasTone and Standard Foods
Assuming the 90 days trading horizon Far EasTone Telecommunications is expected to generate 1.42 times more return on investment than Standard Foods. However, Far EasTone is 1.42 times more volatile than Standard Foods Corp. It trades about 0.0 of its potential returns per unit of risk. Standard Foods Corp is currently generating about -0.11 per unit of risk. If you would invest 9,050 in Far EasTone Telecommunications on November 28, 2024 and sell it today you would lose (70.00) from holding Far EasTone Telecommunications or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. Standard Foods Corp
Performance |
| Timeline |
| Far EasTone Telecomm |
| Standard Foods Corp |
Far EasTone and Standard Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Standard Foods
The main advantage of trading using opposite Far EasTone and Standard Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Standard Foods 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 Standard Foods will offset losses from the drop in Standard Foods' long position.| Far EasTone vs. Taiwan Mobile Co | Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. President Chain Store | Far EasTone vs. Formosa Petrochemical Corp |
| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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