Correlation Between Far EasTone and Mitake Information

Can any of the company-specific risk be diversified away by investing in both Far EasTone and Mitake Information 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 Mitake Information 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 Mitake Information, you can compare the effects of market volatilities on Far EasTone and Mitake Information 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 Mitake Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Mitake Information.

Diversification Opportunities for Far EasTone and Mitake Information

0.47

Correlation Coefficient

Far EasTone  Mitake Information

Very weak diversification

The 3 months correlation between Far and Mitake is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Mitake Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitake Information 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 Mitake Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitake Information has no effect on the direction of Far EasTone i.e., Far EasTone and Mitake Information go up and down completely randomly.

Pair Corralation between Far EasTone and Mitake Information

Assuming the 90 days trading horizon Far EasTone is expected to generate 1.41 times less return on investment than Mitake Information. In addition to that, Far EasTone is 1.28 times more volatile than Mitake Information. It trades about 0.04 of its total potential returns per unit of risk. Mitake Information is currently generating about 0.08 per unit of volatility. If you would invest  6,690  in Mitake Information on December 21, 2024 and sell it today you would earn a total of  200.00  from holding Mitake Information or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Far EasTone Telecommunications  vs.  Mitake Information

Far EasTone Telecomm

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Far EasTone Telecommunications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Far EasTone is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mitake Information

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitake Information are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mitake Information is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Far EasTone and Mitake Information

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

The idea behind Far EasTone Telecommunications and Mitake Information 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.