Correlation Between Farglory Life and Highwealth Construction

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Can any of the company-specific risk be diversified away by investing in both Farglory Life and Highwealth Construction 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 Life and Highwealth Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farglory Life Insurance and Highwealth Construction Corp, you can compare the effects of market volatilities on Farglory Life and Highwealth Construction 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 Life with a short position of Highwealth Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory Life and Highwealth Construction.

Diversification Opportunities for Farglory Life and Highwealth Construction

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Farglory and Highwealth is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Life Insurance and Highwealth Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwealth Construction and Farglory Life 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 Life Insurance are associated (or correlated) with Highwealth Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwealth Construction has no effect on the direction of Farglory Life i.e., Farglory Life and Highwealth Construction go up and down completely randomly.

Pair Corralation between Farglory Life and Highwealth Construction

Assuming the 90 days trading horizon Farglory Life Insurance is expected to generate 20.06 times more return on investment than Highwealth Construction. However, Farglory Life is 20.06 times more volatile than Highwealth Construction Corp. It trades about 0.06 of its potential returns per unit of risk. Highwealth Construction Corp is currently generating about 0.02 per unit of risk. If you would invest  1,192  in Farglory Life Insurance on October 4, 2024 and sell it today you would earn a total of  428.00  from holding Farglory Life Insurance or generate 35.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Farglory Life Insurance  vs.  Highwealth Construction Corp

 Performance 
       Timeline  
Farglory Life Insurance 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Farglory Life Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Farglory Life showed solid returns over the last few months and may actually be approaching a breakup point.
Highwealth Construction 

Risk-Adjusted Performance

0 of 100

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

Farglory Life and Highwealth Construction Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Farglory Life and Highwealth Construction

The main advantage of trading using opposite Farglory Life and Highwealth Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory Life position performs unexpectedly, Highwealth Construction 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 Highwealth Construction will offset losses from the drop in Highwealth Construction's long position.
The idea behind Farglory Life Insurance and Highwealth Construction 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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