Correlation Between Galaxy Software and FarGlory Hotel
Can any of the company-specific risk be diversified away by investing in both Galaxy Software and FarGlory Hotel 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 Galaxy Software and FarGlory Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galaxy Software Services and FarGlory Hotel Co, you can compare the effects of market volatilities on Galaxy Software and FarGlory Hotel 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 Galaxy Software with a short position of FarGlory Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Software and FarGlory Hotel.
Diversification Opportunities for Galaxy Software and FarGlory Hotel
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Galaxy and FarGlory is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Software Services and FarGlory Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarGlory Hotel and Galaxy Software 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 Galaxy Software Services are associated (or correlated) with FarGlory Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarGlory Hotel has no effect on the direction of Galaxy Software i.e., Galaxy Software and FarGlory Hotel go up and down completely randomly.
Pair Corralation between Galaxy Software and FarGlory Hotel
Assuming the 90 days trading horizon Galaxy Software Services is expected to generate 1.6 times more return on investment than FarGlory Hotel. However, Galaxy Software is 1.6 times more volatile than FarGlory Hotel Co. It trades about 0.06 of its potential returns per unit of risk. FarGlory Hotel Co is currently generating about -0.2 per unit of risk. If you would invest 12,900 in Galaxy Software Services on November 6, 2024 and sell it today you would earn a total of 300.00 from holding Galaxy Software Services or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galaxy Software Services vs. FarGlory Hotel Co
Performance |
| Timeline |
| Galaxy Software Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| FarGlory Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Galaxy Software and FarGlory Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galaxy Software and FarGlory Hotel
The main advantage of trading using opposite Galaxy Software and FarGlory Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Software position performs unexpectedly, FarGlory Hotel 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 FarGlory Hotel will offset losses from the drop in FarGlory Hotel's long position.The idea behind Galaxy Software Services and FarGlory Hotel Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges |