Correlation Between Farglory Life and PlayNitride

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

Diversification Opportunities for Farglory Life and PlayNitride

-0.02

Correlation Coefficient

Farglory Life  PlayNitride

Good diversification

The 3 months correlation between Farglory and PlayNitride is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Life Insurance and PlayNitride in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayNitride 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 PlayNitride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayNitride has no effect on the direction of Farglory Life i.e., Farglory Life and PlayNitride go up and down completely randomly.

Pair Corralation between Farglory Life and PlayNitride

Assuming the 90 days trading horizon Farglory Life Insurance is expected to generate 13.88 times more return on investment than PlayNitride. However, Farglory Life is 13.88 times more volatile than PlayNitride. It trades about 0.06 of its potential returns per unit of risk. PlayNitride is currently generating about 0.06 per unit of risk. If you would invest  1,183  in Farglory Life Insurance on October 3, 2024 and sell it today you would earn a total of  437.00  from holding Farglory Life Insurance or generate 36.94% return on investment over 90 days.

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

Farglory Life Insurance  vs.  PlayNitride

Farglory Life Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Farglory Life Insurance are ranked lower than 2 (%) 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.

PlayNitride

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayNitride are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, PlayNitride showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farglory Life and PlayNitride

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

The idea behind Farglory Life Insurance and PlayNitride 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.