Correlation Between FarGlory Hotel and Apex Biotechnology

Can any of the company-specific risk be diversified away by investing in both FarGlory Hotel and Apex Biotechnology 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 Hotel and Apex Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FarGlory Hotel Co and Apex Biotechnology Corp, you can compare the effects of market volatilities on FarGlory Hotel and Apex Biotechnology 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 Hotel with a short position of Apex Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of FarGlory Hotel and Apex Biotechnology.

Diversification Opportunities for FarGlory Hotel and Apex Biotechnology

0.8

Correlation Coefficient

FarGlory Hotel  Apex Biotechnology

Very poor diversification

The 3 months correlation between FarGlory and Apex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FarGlory Hotel Co and Apex Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Biotechnology Corp and FarGlory Hotel 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 Hotel Co are associated (or correlated) with Apex Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Biotechnology Corp has no effect on the direction of FarGlory Hotel i.e., FarGlory Hotel and Apex Biotechnology go up and down completely randomly.

Pair Corralation between FarGlory Hotel and Apex Biotechnology

Assuming the 90 days trading horizon FarGlory Hotel Co is expected to generate 1.53 times more return on investment than Apex Biotechnology. However, FarGlory Hotel is 1.53 times more volatile than Apex Biotechnology Corp. It trades about 0.07 of its potential returns per unit of risk. Apex Biotechnology Corp is currently generating about -0.05 per unit of risk. If you would invest  2,420  in FarGlory Hotel Co on September 16, 2024 and sell it today you would earn a total of  55.00  from holding FarGlory Hotel Co or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

FarGlory Hotel Co  vs.  Apex Biotechnology Corp

FarGlory Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FarGlory Hotel Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FarGlory Hotel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apex Biotechnology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with FarGlory Hotel and Apex Biotechnology

The main advantage of trading using opposite FarGlory Hotel and Apex Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FarGlory Hotel position performs unexpectedly, Apex Biotechnology 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 Apex Biotechnology will offset losses from the drop in Apex Biotechnology's long position.

The idea behind FarGlory Hotel Co and Apex Biotechnology Corp 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..