Correlation Between Farglory Land and Capital Ice

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

By analyzing existing cross correlation between Farglory Land Development and Capital Ice 7, you can compare the effects of market volatilities on Farglory Land and Capital Ice 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 Land with a short position of Capital Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory Land and Capital Ice.

Diversification Opportunities for Farglory Land and Capital Ice

0.35

Correlation Coefficient

Farglory Land  Capital Ice

Weak diversification

The 3 months correlation between Farglory and Capital is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Land Development and Capital Ice 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Ice 7 and Farglory Land 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 Land Development are associated (or correlated) with Capital Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Ice 7 has no effect on the direction of Farglory Land i.e., Farglory Land and Capital Ice go up and down completely randomly.

Pair Corralation between Farglory Land and Capital Ice

Assuming the 90 days trading horizon Farglory Land Development is expected to generate 4.04 times more return on investment than Capital Ice. However, Farglory Land is 4.04 times more volatile than Capital Ice 7. It trades about 0.07 of its potential returns per unit of risk. Capital Ice 7 is currently generating about 0.02 per unit of risk. If you would invest  7,510  in Farglory Land Development on December 2, 2024 and sell it today you would earn a total of  290.00  from holding Farglory Land Development or generate 3.86% return on investment over 90 days.

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

Farglory Land Development  vs.  Capital Ice 7

Farglory Land Development

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Farglory Land Development are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Farglory Land showed solid returns over the last few months and may actually be approaching a breakup point.

Capital Ice 7

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Ice 7 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Capital Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Farglory Land and Capital Ice

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

The idea behind Farglory Land Development and Capital Ice 7 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.