Correlation Between Cameo Communications and Far EasTone
Can any of the company-specific risk be diversified away by investing in both Cameo Communications 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 Cameo Communications and Far EasTone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cameo Communications and Far EasTone Telecommunications, you can compare the effects of market volatilities on Cameo Communications 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 Cameo Communications with a short position of Far EasTone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Far EasTone.
Diversification Opportunities for Cameo Communications and Far EasTone
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cameo and Far is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications 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 Cameo Communications 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 Cameo Communications 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 Cameo Communications i.e., Cameo Communications and Far EasTone go up and down completely randomly.
Pair Corralation between Cameo Communications and Far EasTone
Assuming the 90 days trading horizon Cameo Communications is expected to under-perform the Far EasTone. In addition to that, Cameo Communications is 2.16 times more volatile than Far EasTone Telecommunications. It trades about -0.12 of its total potential returns per unit of risk. Far EasTone Telecommunications is currently generating about 0.05 per unit of volatility. If you would invest 8,900 in Far EasTone Telecommunications on September 2, 2024 and sell it today you would earn a total of 90.00 from holding Far EasTone Telecommunications or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cameo Communications vs. Far EasTone Telecommunications
Performance |
| Timeline |
| Cameo Communications |
| Far EasTone Telecomm |
Cameo Communications and Far EasTone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cameo Communications and Far EasTone
The main advantage of trading using opposite Cameo Communications and Far EasTone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cameo Communications 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.The idea behind Cameo Communications and Far EasTone Telecommunications 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.| Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. President Chain Store | Far EasTone vs. Formosa Petrochemical Corp | Far EasTone vs. Formosa Chemicals Fibre |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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