Correlation Between Victory New and Fu Burg

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

By analyzing existing cross correlation between Victory New Materials and Fu Burg Industrial, you can compare the effects of market volatilities on Victory New and Fu Burg 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 Victory New with a short position of Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Fu Burg.

Diversification Opportunities for Victory New and Fu Burg

-0.46

Correlation Coefficient

Victory New  Fu Burg

Very good diversification

The 3 months correlation between Victory and 8929 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial and Victory New 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 Victory New Materials are associated (or correlated) with Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of Victory New i.e., Victory New and Fu Burg go up and down completely randomly.

Pair Corralation between Victory New and Fu Burg

Assuming the 90 days trading horizon Victory New Materials is expected to generate 0.1 times more return on investment than Fu Burg. However, Victory New Materials is 10.08 times less risky than Fu Burg. It trades about -0.43 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about -0.06 per unit of risk. If you would invest  999.00  in Victory New Materials on September 22, 2024 and sell it today you would lose (41.00) from holding Victory New Materials or give up 4.1% of portfolio value over 90 days.

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

Victory New Materials  vs.  Fu Burg Industrial

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Victory New is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fu Burg Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fu Burg Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fu Burg may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Victory New and Fu Burg

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

The idea behind Victory New Materials and Fu Burg Industrial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.