Correlation Between Cathay Real and Farglory Land
Can any of the company-specific risk be diversified away by investing in both Cathay Real and Farglory Land 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 Cathay Real and Farglory Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Real Estate and Farglory Land Development, you can compare the effects of market volatilities on Cathay Real and Farglory Land 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 Cathay Real with a short position of Farglory Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Real and Farglory Land.
Diversification Opportunities for Cathay Real and Farglory Land
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cathay and Farglory is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Real Estate and Farglory Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory Land Development and Cathay Real 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 Cathay Real Estate are associated (or correlated) with Farglory Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory Land Development has no effect on the direction of Cathay Real i.e., Cathay Real and Farglory Land go up and down completely randomly.
Pair Corralation between Cathay Real and Farglory Land
Assuming the 90 days trading horizon Cathay Real Estate is expected to generate 1.1 times more return on investment than Farglory Land. However, Cathay Real is 1.1 times more volatile than Farglory Land Development. It trades about 0.07 of its potential returns per unit of risk. Farglory Land Development is currently generating about 0.05 per unit of risk. If you would invest 1,510 in Cathay Real Estate on September 26, 2024 and sell it today you would earn a total of 875.00 from holding Cathay Real Estate or generate 57.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.67% |
Values | Daily Returns |
Cathay Real Estate vs. Farglory Land Development
Performance |
Timeline |
Cathay Real Estate |
Farglory Land Development |
Cathay Real and Farglory Land Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cathay Real and Farglory Land
The main advantage of trading using opposite Cathay Real and Farglory Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Real position performs unexpectedly, Farglory Land 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 Land will offset losses from the drop in Farglory Land's long position.Cathay Real vs. Hung Sheng Construction | Cathay Real vs. Chainqui Construction Development | Cathay Real vs. BES Engineering Co | Cathay Real vs. Long Bon International |
Farglory Land vs. Hung Sheng Construction | Farglory Land vs. Chainqui Construction Development | Farglory Land vs. BES Engineering Co | Farglory Land vs. Long Bon International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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