Correlation Between Farglory FTZ and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Farglory FTZ and Sunny Friend 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 Sunny Friend 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 Sunny Friend Environmental, you can compare the effects of market volatilities on Farglory FTZ and Sunny Friend 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 Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory FTZ and Sunny Friend.
Diversification Opportunities for Farglory FTZ and Sunny Friend
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farglory and Sunny is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Farglory FTZ Investment and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ 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 Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Farglory FTZ i.e., Farglory FTZ and Sunny Friend go up and down completely randomly.
Pair Corralation between Farglory FTZ and Sunny Friend
Assuming the 90 days trading horizon Farglory FTZ Investment is expected to generate 1.2 times more return on investment than Sunny Friend. However, Farglory FTZ is 1.2 times more volatile than Sunny Friend Environmental. It trades about -0.03 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.04 per unit of risk. If you would invest 5,620 in Farglory FTZ Investment on August 29, 2024 and sell it today you would lose (1,155) from holding Farglory FTZ Investment or give up 20.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory FTZ Investment vs. Sunny Friend Environmental
Performance |
| Timeline |
| Farglory FTZ Investment |
| Sunny Friend Environ |
Farglory FTZ and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory FTZ and Sunny Friend
The main advantage of trading using opposite Farglory FTZ and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory FTZ position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend'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 |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. TTET Union 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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