Correlation Between Fujian Green and Xingguang Agricultural

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Can any of the company-specific risk be diversified away by investing in both Fujian Green and Xingguang Agricultural 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 Fujian Green and Xingguang Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fujian Green Pine and Xingguang Agricultural Mach, you can compare the effects of market volatilities on Fujian Green and Xingguang Agricultural 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 Fujian Green with a short position of Xingguang Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Green and Xingguang Agricultural.

Diversification Opportunities for Fujian Green and Xingguang Agricultural

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Fujian and Xingguang is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Green Pine and Xingguang Agricultural Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingguang Agricultural and Fujian Green 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 Fujian Green Pine are associated (or correlated) with Xingguang Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingguang Agricultural has no effect on the direction of Fujian Green i.e., Fujian Green and Xingguang Agricultural go up and down completely randomly.

Pair Corralation between Fujian Green and Xingguang Agricultural

Assuming the 90 days trading horizon Fujian Green Pine is expected to generate 0.43 times more return on investment than Xingguang Agricultural. However, Fujian Green Pine is 2.34 times less risky than Xingguang Agricultural. It trades about 0.07 of its potential returns per unit of risk. Xingguang Agricultural Mach is currently generating about -0.03 per unit of risk. If you would invest  517.00  in Fujian Green Pine on December 27, 2024 and sell it today you would earn a total of  37.00  from holding Fujian Green Pine or generate 7.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Fujian Green Pine  vs.  Xingguang Agricultural Mach

 Performance 
       Timeline  
Fujian Green Pine 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Green Pine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Green may actually be approaching a critical reversion point that can send shares even higher in April 2025.
Xingguang Agricultural 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Xingguang Agricultural Mach 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.

Fujian Green and Xingguang Agricultural Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fujian Green and Xingguang Agricultural

The main advantage of trading using opposite Fujian Green and Xingguang Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Green position performs unexpectedly, Xingguang Agricultural 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 Xingguang Agricultural will offset losses from the drop in Xingguang Agricultural's long position.
The idea behind Fujian Green Pine and Xingguang Agricultural Mach 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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