Correlation Between Integrated Electronic and China Fortune

Can any of the company-specific risk be diversified away by investing in both Integrated Electronic and China Fortune 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 Integrated Electronic and China Fortune into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integrated Electronic Systems and China Fortune Land, you can compare the effects of market volatilities on Integrated Electronic and China Fortune 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 Integrated Electronic with a short position of China Fortune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Electronic and China Fortune.

Diversification Opportunities for Integrated Electronic and China Fortune

0.59

Correlation Coefficient

Integrated Electronic  China Fortune

Very weak diversification

The 3 months correlation between Integrated and China is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Electronic Systems and China Fortune Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fortune Land and Integrated Electronic 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 Integrated Electronic Systems are associated (or correlated) with China Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fortune Land has no effect on the direction of Integrated Electronic i.e., Integrated Electronic and China Fortune go up and down completely randomly.

Pair Corralation between Integrated Electronic and China Fortune

Assuming the 90 days trading horizon Integrated Electronic Systems is expected to generate 0.7 times more return on investment than China Fortune. However, Integrated Electronic Systems is 1.42 times less risky than China Fortune. It trades about 0.0 of its potential returns per unit of risk. China Fortune Land is currently generating about -0.12 per unit of risk. If you would invest  733.00  in Integrated Electronic Systems on December 26, 2024 and sell it today you would lose (9.00) from holding Integrated Electronic Systems or give up 1.23% of portfolio value over 90 days.

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

Integrated Electronic Systems  vs.  China Fortune Land

Integrated Electronic

Risk-Adjusted Performance

Very Weak

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

China Fortune Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Fortune Land 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Integrated Electronic and China Fortune

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

The idea behind Integrated Electronic Systems and China Fortune Land 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.