Correlation Between Far EasTone and Analog Integrations
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Analog Integrations 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 Analog Integrations 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 Analog Integrations, you can compare the effects of market volatilities on Far EasTone and Analog Integrations 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 Analog Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Analog Integrations.
Diversification Opportunities for Far EasTone and Analog Integrations
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Far and Analog is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Analog Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Integrations 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 Analog Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Integrations has no effect on the direction of Far EasTone i.e., Far EasTone and Analog Integrations go up and down completely randomly.
Pair Corralation between Far EasTone and Analog Integrations
Assuming the 90 days trading horizon Far EasTone is expected to generate 1.93 times less return on investment than Analog Integrations. But when comparing it to its historical volatility, Far EasTone Telecommunications is 1.93 times less risky than Analog Integrations. It trades about 0.07 of its potential returns per unit of risk. Analog Integrations is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,600 in Analog Integrations on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Analog Integrations or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. Analog Integrations
Performance |
| Timeline |
| Far EasTone Telecomm |
| Analog Integrations |
Far EasTone and Analog Integrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Analog Integrations
The main advantage of trading using opposite Far EasTone and Analog Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Analog Integrations 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 Analog Integrations will offset losses from the drop in Analog Integrations' 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 |
| Analog Integrations vs. Lelon Electronics Corp | Analog Integrations vs. WT Microelectronics Co | Analog Integrations vs. Higher Way Electronic | Analog Integrations vs. Formosa International Hotels |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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