Correlation Between FSPG Hi and Guangzhou Boji

Can any of the company-specific risk be diversified away by investing in both FSPG Hi and Guangzhou Boji 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 FSPG Hi and Guangzhou Boji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FSPG Hi Tech Co and Guangzhou Boji Medical, you can compare the effects of market volatilities on FSPG Hi and Guangzhou Boji 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 FSPG Hi with a short position of Guangzhou Boji. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSPG Hi and Guangzhou Boji.

Diversification Opportunities for FSPG Hi and Guangzhou Boji

0.53

Correlation Coefficient

FSPG Hi  Guangzhou Boji

Very weak diversification

The 3 months correlation between FSPG and Guangzhou is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FSPG Hi Tech Co and Guangzhou Boji Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Boji Medical and FSPG Hi 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 FSPG Hi Tech Co are associated (or correlated) with Guangzhou Boji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Boji Medical has no effect on the direction of FSPG Hi i.e., FSPG Hi and Guangzhou Boji go up and down completely randomly.

Pair Corralation between FSPG Hi and Guangzhou Boji

Assuming the 90 days trading horizon FSPG Hi Tech Co is expected to under-perform the Guangzhou Boji. In addition to that, FSPG Hi is 1.35 times more volatile than Guangzhou Boji Medical. It trades about -0.45 of its total potential returns per unit of risk. Guangzhou Boji Medical is currently generating about 0.06 per unit of volatility. If you would invest  892.00  in Guangzhou Boji Medical on September 25, 2024 and sell it today you would earn a total of  24.00  from holding Guangzhou Boji Medical or generate 2.69% return on investment over 90 days.

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

FSPG Hi Tech Co  vs.  Guangzhou Boji Medical

FSPG Hi Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FSPG Hi Tech Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FSPG Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Boji Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Boji Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Boji sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FSPG Hi and Guangzhou Boji

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

The idea behind FSPG Hi Tech Co and Guangzhou Boji Medical 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..