Correlation Between Vanfund Urban and Fujian Newland

Can any of the company-specific risk be diversified away by investing in both Vanfund Urban and Fujian Newland 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 Vanfund Urban and Fujian Newland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanfund Urban Investment and Fujian Newland Computer, you can compare the effects of market volatilities on Vanfund Urban and Fujian Newland 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 Vanfund Urban with a short position of Fujian Newland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanfund Urban and Fujian Newland.

Diversification Opportunities for Vanfund Urban and Fujian Newland

0.82

Correlation Coefficient

Vanfund Urban  Fujian Newland

Very poor diversification

The 3 months correlation between Vanfund and Fujian is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment and Fujian Newland Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Newland Computer and Vanfund Urban 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 Vanfund Urban Investment are associated (or correlated) with Fujian Newland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Newland Computer has no effect on the direction of Vanfund Urban i.e., Vanfund Urban and Fujian Newland go up and down completely randomly.

Pair Corralation between Vanfund Urban and Fujian Newland

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to under-perform the Fujian Newland. In addition to that, Vanfund Urban is 1.33 times more volatile than Fujian Newland Computer. It trades about -0.01 of its total potential returns per unit of risk. Fujian Newland Computer is currently generating about 0.04 per unit of volatility. If you would invest  1,313  in Fujian Newland Computer on October 4, 2024 and sell it today you would earn a total of  584.00  from holding Fujian Newland Computer or generate 44.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Vanfund Urban Investment  vs.  Fujian Newland Computer

Vanfund Urban Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanfund Urban Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vanfund Urban is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fujian Newland Computer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Newland Computer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Newland sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanfund Urban and Fujian Newland

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

The idea behind Vanfund Urban Investment and Fujian Newland Computer 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.