Correlation Between Sichuan Fulin and Lootom Telcovideo

Can any of the company-specific risk be diversified away by investing in both Sichuan Fulin and Lootom Telcovideo 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 Sichuan Fulin and Lootom Telcovideo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sichuan Fulin Transportation and Lootom Telcovideo Network, you can compare the effects of market volatilities on Sichuan Fulin and Lootom Telcovideo 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 Sichuan Fulin with a short position of Lootom Telcovideo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and Lootom Telcovideo.

Diversification Opportunities for Sichuan Fulin and Lootom Telcovideo

0.68

Correlation Coefficient

Sichuan Fulin  Lootom Telcovideo

Poor diversification

The 3 months correlation between Sichuan and Lootom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Lootom Telcovideo Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lootom Telcovideo Network and Sichuan Fulin 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 Sichuan Fulin Transportation are associated (or correlated) with Lootom Telcovideo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lootom Telcovideo Network has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and Lootom Telcovideo go up and down completely randomly.

Pair Corralation between Sichuan Fulin and Lootom Telcovideo

Assuming the 90 days trading horizon Sichuan Fulin is expected to generate 1.56 times less return on investment than Lootom Telcovideo. But when comparing it to its historical volatility, Sichuan Fulin Transportation is 1.45 times less risky than Lootom Telcovideo. It trades about 0.05 of its potential returns per unit of risk. Lootom Telcovideo Network is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  805.00  in Lootom Telcovideo Network on October 7, 2024 and sell it today you would earn a total of  52.00  from holding Lootom Telcovideo Network or generate 6.46% return on investment over 90 days.

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

Sichuan Fulin Transportation  vs.  Lootom Telcovideo Network

Sichuan Fulin Transp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Fulin Transportation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sichuan Fulin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lootom Telcovideo Network

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lootom Telcovideo Network are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lootom Telcovideo sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sichuan Fulin and Lootom Telcovideo

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

The idea behind Sichuan Fulin Transportation and Lootom Telcovideo Network 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.