Correlation Between Far EasTone and Professional Computer
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Professional Computer 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 Professional Computer 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 Professional Computer Technology, you can compare the effects of market volatilities on Far EasTone and Professional Computer 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 Professional Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Professional Computer.
Diversification Opportunities for Far EasTone and Professional Computer
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Far and Professional is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Professional Computer Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Computer 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 Professional Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Computer has no effect on the direction of Far EasTone i.e., Far EasTone and Professional Computer go up and down completely randomly.
Pair Corralation between Far EasTone and Professional Computer
Assuming the 90 days trading horizon Far EasTone is expected to generate 1.2 times less return on investment than Professional Computer. But when comparing it to its historical volatility, Far EasTone Telecommunications is 2.16 times less risky than Professional Computer. It trades about 0.04 of its potential returns per unit of risk. Professional Computer Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,270 in Professional Computer Technology on November 28, 2024 and sell it today you would earn a total of 255.00 from holding Professional Computer Technology or generate 11.23% 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. Professional Computer Technolo
Performance |
| Timeline |
| Far EasTone Telecomm |
| Professional Computer |
Far EasTone and Professional Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Professional Computer
The main advantage of trading using opposite Far EasTone and Professional Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Professional Computer 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 Professional Computer will offset losses from the drop in Professional Computer's 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 |
| Professional Computer vs. Sunspring Metal Corp | Professional Computer vs. Chunghwa Telecom Co | Professional Computer vs. Feng Ching Metal | Professional Computer vs. Chief Telecom |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |