Correlation Between Leofoo Development and Far Eastern

Can any of the company-specific risk be diversified away by investing in both Leofoo Development and Far Eastern 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 Leofoo Development and Far Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leofoo Development Co and Far Eastern Department, you can compare the effects of market volatilities on Leofoo Development and Far Eastern 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 Leofoo Development with a short position of Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leofoo Development and Far Eastern.

Diversification Opportunities for Leofoo Development and Far Eastern

0.36

Correlation Coefficient

Leofoo Development  Far Eastern

Weak diversification

The 3 months correlation between Leofoo and Far is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Leofoo Development Co and Far Eastern Department in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern Department and Leofoo Development 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 Leofoo Development Co are associated (or correlated) with Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern Department has no effect on the direction of Leofoo Development i.e., Leofoo Development and Far Eastern go up and down completely randomly.

Pair Corralation between Leofoo Development and Far Eastern

Assuming the 90 days trading horizon Leofoo Development Co is expected to generate 0.83 times more return on investment than Far Eastern. However, Leofoo Development Co is 1.21 times less risky than Far Eastern. It trades about -0.12 of its potential returns per unit of risk. Far Eastern Department is currently generating about -0.21 per unit of risk. If you would invest  1,835  in Leofoo Development Co on August 31, 2024 and sell it today you would lose (110.00) from holding Leofoo Development Co or give up 5.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Leofoo Development Co  vs.  Far Eastern Department

Leofoo Development

Risk-Adjusted Performance

0 of 100

Very Weak

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

Far Eastern Department

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Far Eastern Department 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.

Pair Trading with Leofoo Development and Far Eastern

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

The idea behind Leofoo Development Co and Far Eastern Department 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.