Correlation Between Farglory FTZ and Far EasTone
Can any of the company-specific risk be diversified away by investing in both Farglory FTZ and Far EasTone 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 Far EasTone 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 Far EasTone Telecommunications, you can compare the effects of market volatilities on Farglory FTZ and Far EasTone 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 Far EasTone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory FTZ and Far EasTone.
Diversification Opportunities for Farglory FTZ and Far EasTone
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farglory and Far is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Farglory FTZ Investment and Far EasTone Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far EasTone Telecomm 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 Far EasTone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far EasTone Telecomm has no effect on the direction of Farglory FTZ i.e., Farglory FTZ and Far EasTone go up and down completely randomly.
Pair Corralation between Farglory FTZ and Far EasTone
Assuming the 90 days trading horizon Farglory FTZ Investment is expected to under-perform the Far EasTone. In addition to that, Farglory FTZ is 1.45 times more volatile than Far EasTone Telecommunications. It trades about -0.08 of its total potential returns per unit of risk. Far EasTone Telecommunications is currently generating about 0.06 per unit of volatility. If you would invest 8,350 in Far EasTone Telecommunications on August 29, 2024 and sell it today you would earn a total of 820.00 from holding Far EasTone Telecommunications or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory FTZ Investment vs. Far EasTone Telecommunications
Performance |
| Timeline |
| Farglory FTZ Investment |
| Far EasTone Telecomm |
Farglory FTZ and Far EasTone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory FTZ and Far EasTone
The main advantage of trading using opposite Farglory FTZ and Far EasTone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory FTZ position performs unexpectedly, Far EasTone 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 Far EasTone will offset losses from the drop in Far EasTone's long position.| Farglory FTZ vs. Yulon Motor Co | Farglory FTZ vs. Far Eastern Department | Farglory FTZ vs. China Steel Corp | Farglory FTZ vs. Chang Hwa Commercial |
| Far EasTone vs. Taiwan Mobile Co | Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. President Chain Store | Far EasTone vs. Formosa Petrochemical Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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