Correlation Between BES Engineering and Farglory Land
Can any of the company-specific risk be diversified away by investing in both BES Engineering 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 BES Engineering and Farglory Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BES Engineering Co and Farglory Land Development, you can compare the effects of market volatilities on BES Engineering 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 BES Engineering with a short position of Farglory Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Farglory Land.
Diversification Opportunities for BES Engineering and Farglory Land
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between BES and Farglory is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co 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 BES Engineering 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 BES Engineering Co 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 BES Engineering i.e., BES Engineering and Farglory Land go up and down completely randomly.
Pair Corralation between BES Engineering and Farglory Land
Assuming the 90 days trading horizon BES Engineering Co is expected to under-perform the Farglory Land. But the stock apears to be less risky and, when comparing its historical volatility, BES Engineering Co is 2.02 times less risky than Farglory Land. The stock trades about -0.04 of its potential returns per unit of risk. The Farglory Land Development is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,820 in Farglory Land Development on September 25, 2024 and sell it today you would earn a total of 1,190 from holding Farglory Land Development or generate 17.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BES Engineering Co vs. Farglory Land Development
Performance |
Timeline |
BES Engineering |
Farglory Land Development |
BES Engineering and Farglory Land Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BES Engineering and Farglory Land
The main advantage of trading using opposite BES Engineering and Farglory Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering 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.BES Engineering vs. Yang Ming Marine | BES Engineering vs. Evergreen Marine Corp | BES Engineering vs. Eva Airways Corp | BES Engineering vs. U Ming Marine Transport |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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