Correlation Between Fortune Parts and G Capital
Can any of the company-specific risk be diversified away by investing in both Fortune Parts and G Capital 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 Fortune Parts and G Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Parts Industry and G Capital Public, you can compare the effects of market volatilities on Fortune Parts and G Capital 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 Fortune Parts with a short position of G Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Parts and G Capital.
Diversification Opportunities for Fortune Parts and G Capital
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fortune and GCAP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Parts Industry and G Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Capital Public and Fortune Parts 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 Fortune Parts Industry are associated (or correlated) with G Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Capital Public has no effect on the direction of Fortune Parts i.e., Fortune Parts and G Capital go up and down completely randomly.
Pair Corralation between Fortune Parts and G Capital
Assuming the 90 days trading horizon Fortune Parts Industry is expected to generate 0.33 times more return on investment than G Capital. However, Fortune Parts Industry is 2.99 times less risky than G Capital. It trades about -0.04 of its potential returns per unit of risk. G Capital Public is currently generating about -0.29 per unit of risk. If you would invest 206.00 in Fortune Parts Industry on September 13, 2024 and sell it today you would lose (7.00) from holding Fortune Parts Industry or give up 3.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fortune Parts Industry vs. G Capital Public
Performance |
Timeline |
Fortune Parts Industry |
G Capital Public |
Fortune Parts and G Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fortune Parts and G Capital
The main advantage of trading using opposite Fortune Parts and G Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Parts position performs unexpectedly, G Capital 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 G Capital will offset losses from the drop in G Capital's long position.Fortune Parts vs. Thai Stanley Electric | Fortune Parts vs. Somboon Advance Technology | Fortune Parts vs. Thai Steel Cable | Fortune Parts vs. President Automobile Industries |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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