Correlation Between FDC International and Tachan Securities

Can any of the company-specific risk be diversified away by investing in both FDC International and Tachan Securities 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 FDC International and Tachan Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FDC International Hotels and Tachan Securities Co, you can compare the effects of market volatilities on FDC International and Tachan Securities 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 FDC International with a short position of Tachan Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDC International and Tachan Securities.

Diversification Opportunities for FDC International and Tachan Securities

0.02

Correlation Coefficient

FDC International  Tachan Securities

Significant diversification

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

Pair Corralation between FDC International and Tachan Securities

Assuming the 90 days trading horizon FDC International Hotels is expected to generate 4.11 times more return on investment than Tachan Securities. However, FDC International is 4.11 times more volatile than Tachan Securities Co. It trades about 0.15 of its potential returns per unit of risk. Tachan Securities Co is currently generating about -0.03 per unit of risk. If you would invest  5,730  in FDC International Hotels on September 5, 2024 and sell it today you would earn a total of  690.00  from holding FDC International Hotels or generate 12.04% return on investment over 90 days.

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

FDC International Hotels  vs.  Tachan Securities Co

FDC International Hotels

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDC International Hotels are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FDC International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tachan Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FDC International and Tachan Securities

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

The idea behind FDC International Hotels and Tachan Securities 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.