Correlation Between Far EasTone and Sirtec International
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Sirtec 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 Far EasTone and Sirtec International 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 Sirtec International Co, you can compare the effects of market volatilities on Far EasTone and Sirtec 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 Far EasTone with a short position of Sirtec International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Sirtec International.
Diversification Opportunities for Far EasTone and Sirtec International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Far and Sirtec is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Sirtec International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirtec International 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 Sirtec International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirtec International has no effect on the direction of Far EasTone i.e., Far EasTone and Sirtec International go up and down completely randomly.
Pair Corralation between Far EasTone and Sirtec International
Assuming the 90 days trading horizon Far EasTone is expected to generate 1.07 times less return on investment than Sirtec International. But when comparing it to its historical volatility, Far EasTone Telecommunications is 1.26 times less risky than Sirtec International. It trades about 0.07 of its potential returns per unit of risk. Sirtec International Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,524 in Sirtec International Co on September 12, 2024 and sell it today you would earn a total of 686.00 from holding Sirtec International Co or generate 27.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. Sirtec International Co
Performance |
| Timeline |
| Far EasTone Telecomm |
| Sirtec International |
Far EasTone and Sirtec International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Sirtec International
The main advantage of trading using opposite Far EasTone and Sirtec International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Sirtec 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 Sirtec International will offset losses from the drop in Sirtec International's long position.| Far EasTone vs. Cheng Mei Materials | Far EasTone vs. Lemtech Holdings Co | Far EasTone vs. Chia Chang Co | Far EasTone vs. Ruentex Development Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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