Correlation Between Sun Sea and FarGlory Hotel
Can any of the company-specific risk be diversified away by investing in both Sun Sea and FarGlory Hotel 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 Sun Sea and FarGlory Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Sea Construction and FarGlory Hotel Co, you can compare the effects of market volatilities on Sun Sea and FarGlory Hotel 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 Sun Sea with a short position of FarGlory Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Sea and FarGlory Hotel.
Diversification Opportunities for Sun Sea and FarGlory Hotel
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and FarGlory is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sun Sea Construction and FarGlory Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarGlory Hotel and Sun Sea 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 Sun Sea Construction are associated (or correlated) with FarGlory Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarGlory Hotel has no effect on the direction of Sun Sea i.e., Sun Sea and FarGlory Hotel go up and down completely randomly.
Pair Corralation between Sun Sea and FarGlory Hotel
Assuming the 90 days trading horizon Sun Sea Construction is expected to under-perform the FarGlory Hotel. In addition to that, Sun Sea is 1.14 times more volatile than FarGlory Hotel Co. It trades about -0.29 of its total potential returns per unit of risk. FarGlory Hotel Co is currently generating about 0.13 per unit of volatility. If you would invest 2,475 in FarGlory Hotel Co on November 28, 2024 and sell it today you would earn a total of 40.00 from holding FarGlory Hotel Co or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Sea Construction vs. FarGlory Hotel Co
Performance |
| Timeline |
| Sun Sea Construction |
| FarGlory Hotel |
Sun Sea and FarGlory Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Sea and FarGlory Hotel
The main advantage of trading using opposite Sun Sea and FarGlory Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Sea position performs unexpectedly, FarGlory Hotel 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 FarGlory Hotel will offset losses from the drop in FarGlory Hotel's long position.| Sun Sea vs. Prime Oil Chemical | Sun Sea vs. Sporton International | Sun Sea vs. Oriental Union Chemical | Sun Sea vs. Asmedia Technology |
| FarGlory Hotel vs. Ambassador Hotel | FarGlory Hotel vs. Lion Travel Service | FarGlory Hotel vs. Chateau International Development | FarGlory Hotel vs. First Hotel 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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