Correlation Between Farglory Land and Long Bon
Can any of the company-specific risk be diversified away by investing in both Farglory Land and Long Bon 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 Farglory Land and Long Bon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farglory Land Development and Long Bon International, you can compare the effects of market volatilities on Farglory Land and Long Bon 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 Farglory Land with a short position of Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory Land and Long Bon.
Diversification Opportunities for Farglory Land and Long Bon
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farglory and Long is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Land Development and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International and Farglory Land 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 Farglory Land Development are associated (or correlated) with Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Farglory Land i.e., Farglory Land and Long Bon go up and down completely randomly.
Pair Corralation between Farglory Land and Long Bon
Assuming the 90 days trading horizon Farglory Land Development is expected to generate 1.19 times more return on investment than Long Bon. However, Farglory Land is 1.19 times more volatile than Long Bon International. It trades about 0.04 of its potential returns per unit of risk. Long Bon International is currently generating about 0.02 per unit of risk. If you would invest 5,790 in Farglory Land Development on October 25, 2024 and sell it today you would earn a total of 1,710 from holding Farglory Land Development or generate 29.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory Land Development vs. Long Bon International
Performance |
| Timeline |
| Farglory Land Development |
| Long Bon International |
Farglory Land and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory Land and Long Bon
The main advantage of trading using opposite Farglory Land and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory Land position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.| Farglory Land vs. Huaku Development Co | Farglory Land vs. Taiwan Fertilizer Co | Farglory Land vs. Asia Cement Corp |
| Long Bon vs. Shining Building Business | Long Bon vs. Farglory Land Development | Long Bon vs. Sweeten Real Estate | Long Bon vs. Hung Ching Development |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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