Correlation Between Farglory Life and Century Iron

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

Diversification Opportunities for Farglory Life and Century Iron

0.69

Correlation Coefficient

Farglory Life  Century Iron

Poor diversification

The 3 months correlation between Farglory and Century is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Life Insurance and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And 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 Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Farglory Life i.e., Farglory Life and Century Iron go up and down completely randomly.

Pair Corralation between Farglory Life and Century Iron

Assuming the 90 days trading horizon Farglory Life is expected to generate 1.45 times less return on investment than Century Iron. But when comparing it to its historical volatility, Farglory Life Insurance is 1.95 times less risky than Century Iron. It trades about 0.08 of its potential returns per unit of risk. Century Iron And is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17,150  in Century Iron And on December 26, 2024 and sell it today you would earn a total of  1,150  from holding Century Iron And or generate 6.71% return on investment over 90 days.

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

Farglory Life Insurance  vs.  Century Iron And

Farglory Life Insurance

Risk-Adjusted Performance

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Century Iron And

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Century Iron And are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Century Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Farglory Life and Century Iron

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

The idea behind Farglory Life Insurance and Century Iron And 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.