Correlation Between Fuh Hwa and Fuh Hwa

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

By analyzing existing cross correlation between Fuh Hwa Daily and Fuh Hwa 20, you can compare the effects of market volatilities on Fuh Hwa and Fuh Hwa 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 Fuh Hwa with a short position of Fuh Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuh Hwa and Fuh Hwa.

Diversification Opportunities for Fuh Hwa and Fuh Hwa

0.5

Correlation Coefficient

Fuh Hwa  Fuh Hwa

Very weak diversification

The 3 months correlation between Fuh and Fuh is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fuh Hwa Daily and Fuh Hwa 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa 20 and Fuh Hwa 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 Fuh Hwa Daily are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa 20 has no effect on the direction of Fuh Hwa i.e., Fuh Hwa and Fuh Hwa go up and down completely randomly.

Pair Corralation between Fuh Hwa and Fuh Hwa

Assuming the 90 days trading horizon Fuh Hwa Daily is expected to generate 4.44 times more return on investment than Fuh Hwa. However, Fuh Hwa is 4.44 times more volatile than Fuh Hwa 20. It trades about 0.25 of its potential returns per unit of risk. Fuh Hwa 20 is currently generating about 0.11 per unit of risk. If you would invest  1,196  in Fuh Hwa Daily on December 21, 2024 and sell it today you would earn a total of  589.00  from holding Fuh Hwa Daily or generate 49.25% return on investment over 90 days.

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

Fuh Hwa Daily  vs.  Fuh Hwa 20

Fuh Hwa Daily

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa Daily are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fuh Hwa sustained solid returns over the last few months and may actually be approaching a breakup point.

Fuh Hwa 20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa 20 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fuh Hwa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fuh Hwa and Fuh Hwa

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

The idea behind Fuh Hwa Daily and Fuh Hwa 20 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 Stocks Directory module to find actively traded stocks across global markets.