Correlation Between Farglory Land and Yungshin Construction
Can any of the company-specific risk be diversified away by investing in both Farglory Land and Yungshin Construction 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 Yungshin Construction 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 Yungshin Construction Development, you can compare the effects of market volatilities on Farglory Land and Yungshin Construction 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 Yungshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory Land and Yungshin Construction.
Diversification Opportunities for Farglory Land and Yungshin Construction
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farglory and Yungshin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Land Development and Yungshin Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yungshin Construction 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 Yungshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yungshin Construction has no effect on the direction of Farglory Land i.e., Farglory Land and Yungshin Construction go up and down completely randomly.
Pair Corralation between Farglory Land and Yungshin Construction
Assuming the 90 days trading horizon Farglory Land is expected to generate 3.22 times less return on investment than Yungshin Construction. But when comparing it to its historical volatility, Farglory Land Development is 1.22 times less risky than Yungshin Construction. It trades about 0.03 of its potential returns per unit of risk. Yungshin Construction Development is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,888 in Yungshin Construction Development on November 5, 2024 and sell it today you would earn a total of 7,712 from holding Yungshin Construction Development or generate 157.77% 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. Yungshin Construction Developm
Performance |
| Timeline |
| Farglory Land Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Yungshin Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farglory Land and Yungshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory Land and Yungshin Construction
The main advantage of trading using opposite Farglory Land and Yungshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory Land position performs unexpectedly, Yungshin Construction 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 Yungshin Construction will offset losses from the drop in Yungshin Construction's long position.The idea behind Farglory Land Development and Yungshin Construction Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stocks Directory module to find actively traded stocks across global markets.
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