Correlation Between Fujian Newland and Beijing Kingsoft

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Can any of the company-specific risk be diversified away by investing in both Fujian Newland and Beijing Kingsoft 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 Beijing Kingsoft 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 Beijing Kingsoft Office, you can compare the effects of market volatilities on Fujian Newland and Beijing Kingsoft 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 Beijing Kingsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Newland and Beijing Kingsoft.

Diversification Opportunities for Fujian Newland and Beijing Kingsoft

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Fujian and Beijing is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Newland Computer and Beijing Kingsoft Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Kingsoft Office 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 Beijing Kingsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Kingsoft Office has no effect on the direction of Fujian Newland i.e., Fujian Newland and Beijing Kingsoft go up and down completely randomly.

Pair Corralation between Fujian Newland and Beijing Kingsoft

Assuming the 90 days trading horizon Fujian Newland Computer is expected to generate 0.82 times more return on investment than Beijing Kingsoft. However, Fujian Newland Computer is 1.22 times less risky than Beijing Kingsoft. It trades about 0.01 of its potential returns per unit of risk. Beijing Kingsoft Office is currently generating about -0.05 per unit of risk. If you would invest  1,811  in Fujian Newland Computer on October 8, 2024 and sell it today you would lose (24.00) from holding Fujian Newland Computer or give up 1.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Fujian Newland Computer  vs.  Beijing Kingsoft Office

 Performance 
       Timeline  
Fujian Newland Computer 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Beijing Kingsoft Office has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fujian Newland and Beijing Kingsoft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fujian Newland and Beijing Kingsoft

The main advantage of trading using opposite Fujian Newland and Beijing Kingsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Newland position performs unexpectedly, Beijing Kingsoft 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 Beijing Kingsoft will offset losses from the drop in Beijing Kingsoft's long position.
The idea behind Fujian Newland Computer and Beijing Kingsoft Office 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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