Correlation Between Changzhou Almaden and Fuzhou Rockchip

Can any of the company-specific risk be diversified away by investing in both Changzhou Almaden and Fuzhou Rockchip 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 Changzhou Almaden and Fuzhou Rockchip into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changzhou Almaden Co and Fuzhou Rockchip Electronics, you can compare the effects of market volatilities on Changzhou Almaden and Fuzhou Rockchip 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 Changzhou Almaden with a short position of Fuzhou Rockchip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and Fuzhou Rockchip.

Diversification Opportunities for Changzhou Almaden and Fuzhou Rockchip

-0.74

Correlation Coefficient

Changzhou Almaden  Fuzhou Rockchip

Pay attention - limited upside

The 3 months correlation between Changzhou and Fuzhou is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and Fuzhou Rockchip Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuzhou Rockchip Elec and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with Fuzhou Rockchip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuzhou Rockchip Elec has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and Fuzhou Rockchip go up and down completely randomly.

Pair Corralation between Changzhou Almaden and Fuzhou Rockchip

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the Fuzhou Rockchip. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 1.36 times less risky than Fuzhou Rockchip. The stock trades about -0.05 of its potential returns per unit of risk. The Fuzhou Rockchip Electronics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,214  in Fuzhou Rockchip Electronics on October 22, 2024 and sell it today you would earn a total of  8,727  from holding Fuzhou Rockchip Electronics or generate 167.38% return on investment over 90 days.

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

Changzhou Almaden Co  vs.  Fuzhou Rockchip Electronics

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fuzhou Rockchip Elec

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuzhou Rockchip Electronics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fuzhou Rockchip sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changzhou Almaden and Fuzhou Rockchip

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

The idea behind Changzhou Almaden Co and Fuzhou Rockchip Electronics 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.