Correlation Between Asia Metal and FarGlory Hotel

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

Diversification Opportunities for Asia Metal and FarGlory Hotel

AsiaFarGloryDiversified AwayAsiaFarGloryDiversified Away100%
-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Asia and FarGlory is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and FarGlory Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarGlory Hotel and Asia Metal 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 Asia Metal Industries are associated (or correlated) with FarGlory Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarGlory Hotel has no effect on the direction of Asia Metal i.e., Asia Metal and FarGlory Hotel go up and down completely randomly.

Pair Corralation between Asia Metal and FarGlory Hotel

Assuming the 90 days trading horizon Asia Metal Industries is expected to under-perform the FarGlory Hotel. In addition to that, Asia Metal is 1.15 times more volatile than FarGlory Hotel Co. It trades about -0.06 of its total potential returns per unit of risk. FarGlory Hotel Co is currently generating about 0.07 per unit of volatility. If you would invest  2,370  in FarGlory Hotel Co on November 18, 2024 and sell it today you would earn a total of  150.00  from holding FarGlory Hotel Co or generate 6.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Asia Metal Industries  vs.  FarGlory Hotel Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.156727 2712
       Timeline  
Asia Metal Industries 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Asia Metal Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb75808590
FarGlory Hotel 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FarGlory Hotel Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FarGlory Hotel may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2424.52525.52626.527

Asia Metal and FarGlory Hotel Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.16-3.11-2.07-1.030.00.971.932.93.87 0.040.050.060.070.080.090.100.11
JavaScript chart by amCharts 3.21.156727 2712
       Returns  

Pair Trading with Asia Metal and FarGlory Hotel

The main advantage of trading using opposite Asia Metal and FarGlory Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal position performs unexpectedly, FarGlory Hotel 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 FarGlory Hotel will offset losses from the drop in FarGlory Hotel's long position.
The idea behind Asia Metal Industries and FarGlory Hotel Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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