Correlation Between Far EasTone and Cameo Communications
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Cameo Communications 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 Far EasTone and Cameo Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far EasTone Telecommunications and Cameo Communications, you can compare the effects of market volatilities on Far EasTone and Cameo Communications 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 Far EasTone with a short position of Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Cameo Communications.
Diversification Opportunities for Far EasTone and Cameo Communications
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Far and Cameo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications and Far EasTone 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 Far EasTone Telecommunications are associated (or correlated) with Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Far EasTone i.e., Far EasTone and Cameo Communications go up and down completely randomly.
Pair Corralation between Far EasTone and Cameo Communications
Assuming the 90 days trading horizon Far EasTone is expected to generate 12.72 times less return on investment than Cameo Communications. But when comparing it to its historical volatility, Far EasTone Telecommunications is 3.54 times less risky than Cameo Communications. It trades about 0.02 of its potential returns per unit of risk. Cameo Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Cameo Communications on September 24, 2024 and sell it today you would earn a total of 70.00 from holding Cameo Communications or generate 5.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Far EasTone Telecommunications vs. Cameo Communications
Performance |
Timeline |
Far EasTone Telecomm |
Cameo Communications |
Far EasTone and Cameo Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Far EasTone and Cameo Communications
The main advantage of trading using opposite Far EasTone and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' long position.Far EasTone vs. Taiwan Mobile Co | Far EasTone vs. China Steel Corp | Far EasTone vs. Formosa Plastics Corp | Far EasTone vs. Cathay Financial Holding |
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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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