Correlation Between FSPG Hi and Shanghai V

Can any of the company-specific risk be diversified away by investing in both FSPG Hi and Shanghai V 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 Shanghai V 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 Shanghai V Test Semiconductor, you can compare the effects of market volatilities on FSPG Hi and Shanghai V 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 Shanghai V. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSPG Hi and Shanghai V.

Diversification Opportunities for FSPG Hi and Shanghai V

0.24

Correlation Coefficient

FSPG Hi  Shanghai V

Modest diversification

The 3 months correlation between FSPG and Shanghai is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FSPG Hi Tech Co and Shanghai V Test Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai V Test 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 Shanghai V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai V Test has no effect on the direction of FSPG Hi i.e., FSPG Hi and Shanghai V go up and down completely randomly.

Pair Corralation between FSPG Hi and Shanghai V

Assuming the 90 days trading horizon FSPG Hi Tech Co is expected to generate 1.23 times more return on investment than Shanghai V. However, FSPG Hi is 1.23 times more volatile than Shanghai V Test Semiconductor. It trades about 0.07 of its potential returns per unit of risk. Shanghai V Test Semiconductor is currently generating about 0.06 per unit of risk. If you would invest  507.00  in FSPG Hi Tech Co on October 25, 2024 and sell it today you would earn a total of  71.00  from holding FSPG Hi Tech Co or generate 14.0% return on investment over 90 days.

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

FSPG Hi Tech Co  vs.  Shanghai V Test Semiconductor

FSPG Hi Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FSPG Hi Tech Co are ranked lower than 5 (%) 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.

Shanghai V Test

Risk-Adjusted Performance

4 of 100

Modest

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

Pair Trading with FSPG Hi and Shanghai V

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

The idea behind FSPG Hi Tech Co and Shanghai V Test Semiconductor 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.