Correlation Between Fujian Newland and FSPG Hi

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

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

Diversification Opportunities for Fujian Newland and FSPG Hi

0.8

Correlation Coefficient

Fujian Newland  FSPG Hi

Very poor diversification

The 3 months correlation between Fujian and FSPG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Newland Computer and FSPG Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSPG Hi Tech and Fujian Newland 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 Fujian Newland Computer are associated (or correlated) with FSPG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSPG Hi Tech has no effect on the direction of Fujian Newland i.e., Fujian Newland and FSPG Hi go up and down completely randomly.

Pair Corralation between Fujian Newland and FSPG Hi

Assuming the 90 days trading horizon Fujian Newland Computer is expected to generate 1.06 times more return on investment than FSPG Hi. However, Fujian Newland is 1.06 times more volatile than FSPG Hi Tech Co. It trades about 0.05 of its potential returns per unit of risk. FSPG Hi Tech Co is currently generating about 0.05 per unit of risk. If you would invest  1,239  in Fujian Newland Computer on September 20, 2024 and sell it today you would earn a total of  781.00  from holding Fujian Newland Computer or generate 63.03% return on investment over 90 days.

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

Fujian Newland Computer  vs.  FSPG Hi Tech Co

Fujian Newland Computer

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Newland Computer are ranked lower than 16 (%) 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.

FSPG Hi Tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FSPG Hi Tech Co are ranked lower than 17 (%) 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.

Pair Trading with Fujian Newland and FSPG Hi

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

The idea behind Fujian Newland Computer and FSPG Hi Tech Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.