Correlation Between Far EasTone and I Sheng
Can any of the company-specific risk be diversified away by investing in both Far EasTone and I Sheng 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 I Sheng 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 I Sheng Electric Wire, you can compare the effects of market volatilities on Far EasTone and I Sheng 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 I Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and I Sheng.
Diversification Opportunities for Far EasTone and I Sheng
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Far and 6115 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and I Sheng Electric Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Sheng Electric 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 I Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Sheng Electric has no effect on the direction of Far EasTone i.e., Far EasTone and I Sheng go up and down completely randomly.
Pair Corralation between Far EasTone and I Sheng
Assuming the 90 days trading horizon Far EasTone Telecommunications is expected to generate 1.2 times more return on investment than I Sheng. However, Far EasTone is 1.2 times more volatile than I Sheng Electric Wire. It trades about 0.07 of its potential returns per unit of risk. I Sheng Electric Wire is currently generating about 0.06 per unit of risk. If you would invest 6,580 in Far EasTone Telecommunications on September 3, 2024 and sell it today you would earn a total of 2,570 from holding Far EasTone Telecommunications or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. I Sheng Electric Wire
Performance |
| Timeline |
| Far EasTone Telecomm |
| I Sheng Electric |
Far EasTone and I Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and I Sheng
The main advantage of trading using opposite Far EasTone and I Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, I Sheng 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 I Sheng will offset losses from the drop in I Sheng's long position.| Far EasTone vs. China Steel Corp | Far EasTone vs. Formosa Plastics Corp | Far EasTone vs. Cathay Financial Holding | Far EasTone vs. Fubon Financial Holding |
| I Sheng vs. RiTdisplay Corp | I Sheng vs. WinMate Communication INC | I Sheng vs. Hannstar Display Corp | I Sheng vs. Unitech Computer 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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