Correlation Between Data International and Farglory FTZ

Can any of the company-specific risk be diversified away by investing in both Data International and Farglory FTZ 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 Data International and Farglory FTZ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data International Co and Farglory FTZ Investment, you can compare the effects of market volatilities on Data International and Farglory FTZ 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 Data International with a short position of Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data International and Farglory FTZ.

Diversification Opportunities for Data International and Farglory FTZ

0.56

Correlation Coefficient

Data International  Farglory FTZ

Very weak diversification

The 3 months correlation between Data and Farglory is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Data International Co and Farglory FTZ Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory FTZ Investment and Data International 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 Data International Co are associated (or correlated) with Farglory FTZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory FTZ Investment has no effect on the direction of Data International i.e., Data International and Farglory FTZ go up and down completely randomly.

Pair Corralation between Data International and Farglory FTZ

Assuming the 90 days trading horizon Data International Co is expected to under-perform the Farglory FTZ. In addition to that, Data International is 2.95 times more volatile than Farglory FTZ Investment. It trades about -0.02 of its total potential returns per unit of risk. Farglory FTZ Investment is currently generating about -0.02 per unit of volatility. If you would invest  4,220  in Farglory FTZ Investment on December 22, 2024 and sell it today you would lose (80.00) from holding Farglory FTZ Investment or give up 1.9% of portfolio value over 90 days.

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

Data International Co  vs.  Farglory FTZ Investment

Data International

Risk-Adjusted Performance

Very Weak

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

Farglory FTZ Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farglory FTZ Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Farglory FTZ 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 Data International and Farglory FTZ

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

The idea behind Data International Co and Farglory FTZ Investment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.