Correlation Between Farglory FTZ and New Era
Can any of the company-specific risk be diversified away by investing in both Farglory FTZ and New Era 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 New Era 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 New Era Electronics, you can compare the effects of market volatilities on Farglory FTZ and New Era 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 New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory FTZ and New Era.
Diversification Opportunities for Farglory FTZ and New Era
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farglory and New is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Farglory FTZ Investment and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics 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 New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of Farglory FTZ i.e., Farglory FTZ and New Era go up and down completely randomly.
Pair Corralation between Farglory FTZ and New Era
Assuming the 90 days trading horizon Farglory FTZ Investment is expected to under-perform the New Era. But the stock apears to be less risky and, when comparing its historical volatility, Farglory FTZ Investment is 1.85 times less risky than New Era. The stock trades about -0.01 of its potential returns per unit of risk. The New Era Electronics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,633 in New Era Electronics on September 3, 2024 and sell it today you would earn a total of 9,817 from holding New Era Electronics or generate 601.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory FTZ Investment vs. New Era Electronics
Performance |
| Timeline |
| Farglory FTZ Investment |
| New Era Electronics |
Farglory FTZ and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory FTZ and New Era
The main advantage of trading using opposite Farglory FTZ and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory FTZ position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| Farglory FTZ vs. Universal Microelectronics Co | Farglory FTZ vs. AVerMedia Technologies | Farglory FTZ vs. Symtek Automation Asia | Farglory FTZ vs. WiseChip Semiconductor |
| New Era vs. Farglory FTZ Investment | New Era vs. Simple Mart Retail | New Era vs. uPI Semiconductor Corp | New Era vs. Syntek Semiconductor 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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