Correlation Between Farglory FTZ and Asia Metal
Can any of the company-specific risk be diversified away by investing in both Farglory FTZ and Asia Metal 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 Asia Metal 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 Asia Metal Industries, you can compare the effects of market volatilities on Farglory FTZ and Asia Metal 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 Asia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory FTZ and Asia Metal.
Diversification Opportunities for Farglory FTZ and Asia Metal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farglory and Asia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Farglory FTZ Investment and Asia Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Industries 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 Asia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Industries has no effect on the direction of Farglory FTZ i.e., Farglory FTZ and Asia Metal go up and down completely randomly.
Pair Corralation between Farglory FTZ and Asia Metal
Assuming the 90 days trading horizon Farglory FTZ Investment is expected to generate 0.74 times more return on investment than Asia Metal. However, Farglory FTZ Investment is 1.36 times less risky than Asia Metal. It trades about -0.16 of its potential returns per unit of risk. Asia Metal Industries is currently generating about -0.15 per unit of risk. If you would invest 4,350 in Farglory FTZ Investment on November 3, 2024 and sell it today you would lose (115.00) from holding Farglory FTZ Investment or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory FTZ Investment vs. Asia Metal Industries
Performance |
| Timeline |
| Farglory FTZ Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Asia Metal Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farglory FTZ and Asia Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory FTZ and Asia Metal
The main advantage of trading using opposite Farglory FTZ and Asia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory FTZ position performs unexpectedly, Asia Metal 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 Asia Metal will offset losses from the drop in Asia Metal's long position.The idea behind Farglory FTZ Investment and Asia Metal Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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