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 1 5 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

0.11

Correlation Coefficient

Fuh Hwa  Fuh Hwa

Average diversification

The 3 months correlation between Fuh and Fuh is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fuh Hwa 1 5 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 1 5 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 1 5 is expected to generate 0.49 times more return on investment than Fuh Hwa. However, Fuh Hwa 1 5 is 2.03 times less risky than Fuh Hwa. It trades about 0.09 of its potential returns per unit of risk. Fuh Hwa 20 is currently generating about -0.1 per unit of risk. If you would invest  1,963  in Fuh Hwa 1 5 on October 12, 2024 and sell it today you would earn a total of  39.00  from holding Fuh Hwa 1 5 or generate 1.99% return on investment over 90 days.

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

Fuh Hwa 1 5  vs.  Fuh Hwa 20

Fuh Hwa 1

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa 1 5 are ranked lower than 7 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Fuh Hwa 20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuh Hwa 20 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fuh Hwa is not utilizing all of its potentials. The newest 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 1 5 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.