Correlation Between Choice Development and Farglory FTZ

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

By analyzing existing cross correlation between Choice Development and Farglory FTZ Investment, you can compare the effects of market volatilities on Choice Development and Farglory FTZ 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 Choice Development with a short position of Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Development and Farglory FTZ.

Diversification Opportunities for Choice Development and Farglory FTZ

0.55

Correlation Coefficient

Choice Development  Farglory FTZ

Very weak diversification

The 3 months correlation between Choice and Farglory is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Choice Development and Farglory FTZ Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory FTZ Investment and Choice 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 Choice Development are associated (or correlated) with Farglory FTZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory FTZ Investment has no effect on the direction of Choice Development i.e., Choice Development and Farglory FTZ go up and down completely randomly.

Pair Corralation between Choice Development and Farglory FTZ

Assuming the 90 days trading horizon Choice Development is expected to under-perform the Farglory FTZ. In addition to that, Choice Development is 1.29 times more volatile than Farglory FTZ Investment. It trades about -0.03 of its total potential returns per unit of risk. Farglory FTZ Investment is currently generating about -0.02 per unit of volatility. If you would invest  4,645  in Farglory FTZ Investment on September 12, 2024 and sell it today you would lose (70.00) from holding Farglory FTZ Investment or give up 1.51% of portfolio value over 90 days.

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

Choice Development  vs.  Farglory FTZ Investment

Choice Development

Risk-Adjusted Performance

0 of 100

Very Weak

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

Farglory FTZ Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farglory FTZ Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Farglory FTZ 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 Choice Development and Farglory FTZ

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

The idea behind Choice Development and Farglory FTZ Investment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.