Correlation Between Farglory Land and Ennoconn Corp

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

Diversification Opportunities for Farglory Land and Ennoconn Corp

0.19

Correlation Coefficient

Farglory Land  Ennoconn Corp

Average diversification

The 3 months correlation between Farglory and Ennoconn is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Land Development and Ennoconn Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennoconn Corp 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 Ennoconn Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennoconn Corp has no effect on the direction of Farglory Land i.e., Farglory Land and Ennoconn Corp go up and down completely randomly.

Pair Corralation between Farglory Land and Ennoconn Corp

Assuming the 90 days trading horizon Farglory Land is expected to generate 1.88 times less return on investment than Ennoconn Corp. In addition to that, Farglory Land is 1.09 times more volatile than Ennoconn Corp. It trades about 0.07 of its total potential returns per unit of risk. Ennoconn Corp is currently generating about 0.14 per unit of volatility. If you would invest  29,200  in Ennoconn Corp on December 2, 2024 and sell it today you would earn a total of  2,350  from holding Ennoconn Corp or generate 8.05% return on investment over 90 days.

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

Farglory Land Development  vs.  Ennoconn Corp

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.

Ennoconn Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ennoconn Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ennoconn Corp 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 Farglory Land and Ennoconn Corp

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

The idea behind Farglory Land Development and Ennoconn 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.