Correlation Between Fujian Boss and UE Furniture

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

By analyzing existing cross correlation between Fujian Boss Software and UE Furniture Co, you can compare the effects of market volatilities on Fujian Boss and UE Furniture 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 Boss with a short position of UE Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Boss and UE Furniture.

Diversification Opportunities for Fujian Boss and UE Furniture

-0.37

Correlation Coefficient

Fujian Boss  UE Furniture

Very good diversification

The 3 months correlation between Fujian and 603600 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Boss Software and UE Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UE Furniture and Fujian Boss 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 Boss Software are associated (or correlated) with UE Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UE Furniture has no effect on the direction of Fujian Boss i.e., Fujian Boss and UE Furniture go up and down completely randomly.

Pair Corralation between Fujian Boss and UE Furniture

Assuming the 90 days trading horizon Fujian Boss Software is expected to generate 1.68 times more return on investment than UE Furniture. However, Fujian Boss is 1.68 times more volatile than UE Furniture Co. It trades about 0.05 of its potential returns per unit of risk. UE Furniture Co is currently generating about 0.05 per unit of risk. If you would invest  1,618  in Fujian Boss Software on December 25, 2024 and sell it today you would earn a total of  103.00  from holding Fujian Boss Software or generate 6.37% return on investment over 90 days.

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

Fujian Boss Software  vs.  UE Furniture Co

Fujian Boss Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Boss Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Boss may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UE Furniture

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UE Furniture Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UE Furniture may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fujian Boss and UE Furniture

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

The idea behind Fujian Boss Software and UE Furniture Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.