Correlation Between Trade Van and FarGlory Hotel

Can any of the company-specific risk be diversified away by investing in both Trade Van 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 Trade Van and FarGlory Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trade Van Information Services and FarGlory Hotel Co, you can compare the effects of market volatilities on Trade Van 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 Trade Van with a short position of FarGlory Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and FarGlory Hotel.

Diversification Opportunities for Trade Van and FarGlory Hotel

-0.67

Correlation Coefficient

Trade Van  FarGlory Hotel

Excellent diversification

The 3 months correlation between Trade and FarGlory is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and FarGlory Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarGlory Hotel and Trade Van 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 Trade Van Information Services 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 Trade Van i.e., Trade Van and FarGlory Hotel go up and down completely randomly.

Pair Corralation between Trade Van and FarGlory Hotel

Assuming the 90 days trading horizon Trade Van Information Services is expected to generate 0.77 times more return on investment than FarGlory Hotel. However, Trade Van Information Services is 1.3 times less risky than FarGlory Hotel. It trades about 0.12 of its potential returns per unit of risk. FarGlory Hotel Co is currently generating about -0.07 per unit of risk. If you would invest  7,320  in Trade Van Information Services on September 5, 2024 and sell it today you would earn a total of  760.00  from holding Trade Van Information Services or generate 10.38% return on investment over 90 days.

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

Trade Van Information Services  vs.  FarGlory Hotel Co

Trade Van Information

Risk-Adjusted Performance

12 of 100

Good

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

FarGlory Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FarGlory Hotel Co 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 Trade Van and FarGlory Hotel

The main advantage of trading using opposite Trade Van and FarGlory Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Van 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 Trade Van Information Services 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.