Correlation Between Farglory FTZ and Chia Yi
Can any of the company-specific risk be diversified away by investing in both Farglory FTZ and Chia Yi 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 FTZ and Chia Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farglory FTZ Investment and Chia Yi Steel, you can compare the effects of market volatilities on Farglory FTZ and Chia Yi 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 FTZ with a short position of Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory FTZ and Chia Yi.
Diversification Opportunities for Farglory FTZ and Chia Yi
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farglory and Chia is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Farglory FTZ Investment and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi Steel and Farglory FTZ 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 FTZ Investment are associated (or correlated) with Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Farglory FTZ i.e., Farglory FTZ and Chia Yi go up and down completely randomly.
Pair Corralation between Farglory FTZ and Chia Yi
Assuming the 90 days trading horizon Farglory FTZ Investment is expected to under-perform the Chia Yi. But the stock apears to be less risky and, when comparing its historical volatility, Farglory FTZ Investment is 1.32 times less risky than Chia Yi. The stock trades about -0.01 of its potential returns per unit of risk. The Chia Yi Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Chia Yi Steel on November 5, 2024 and sell it today you would earn a total of 35.00 from holding Chia Yi Steel or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory FTZ Investment vs. Chia Yi Steel
Performance |
| Timeline |
| Farglory FTZ Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chia Yi Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farglory FTZ and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory FTZ and Chia Yi
The main advantage of trading using opposite Farglory FTZ and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory FTZ position performs unexpectedly, Chia Yi 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 Chia Yi will offset losses from the drop in Chia Yi's long position.The idea behind Farglory FTZ Investment and Chia Yi Steel 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |