Correlation Between Risesun Real and Fujian Longzhou

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

By analyzing existing cross correlation between Risesun Real Estate and Fujian Longzhou Transportation, you can compare the effects of market volatilities on Risesun Real and Fujian Longzhou 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 Risesun Real with a short position of Fujian Longzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Risesun Real and Fujian Longzhou.

Diversification Opportunities for Risesun Real and Fujian Longzhou

0.82

Correlation Coefficient

Risesun Real  Fujian Longzhou

Very poor diversification

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

Pair Corralation between Risesun Real and Fujian Longzhou

Assuming the 90 days trading horizon Risesun Real Estate is expected to under-perform the Fujian Longzhou. In addition to that, Risesun Real is 1.02 times more volatile than Fujian Longzhou Transportation. It trades about 0.0 of its total potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about 0.01 per unit of volatility. If you would invest  466.00  in Fujian Longzhou Transportation on October 9, 2024 and sell it today you would lose (73.00) from holding Fujian Longzhou Transportation or give up 15.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Risesun Real Estate  vs.  Fujian Longzhou Transportation

Risesun Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fujian Longzhou Tran

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Longzhou Transportation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fujian Longzhou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Risesun Real and Fujian Longzhou

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

The idea behind Risesun Real Estate and Fujian Longzhou Transportation 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..