Correlation Between Fibocom Wireless and Tjk Machinery

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

By analyzing existing cross correlation between Fibocom Wireless and Tjk Machinery Tianjin, you can compare the effects of market volatilities on Fibocom Wireless and Tjk Machinery 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 Fibocom Wireless with a short position of Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fibocom Wireless and Tjk Machinery.

Diversification Opportunities for Fibocom Wireless and Tjk Machinery

0.53

Correlation Coefficient

Fibocom Wireless  Tjk Machinery

Very weak diversification

The 3 months correlation between Fibocom and Tjk is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fibocom Wireless and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin and Fibocom Wireless 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 Fibocom Wireless are associated (or correlated) with Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Fibocom Wireless i.e., Fibocom Wireless and Tjk Machinery go up and down completely randomly.

Pair Corralation between Fibocom Wireless and Tjk Machinery

Assuming the 90 days trading horizon Fibocom Wireless is expected to generate 0.98 times more return on investment than Tjk Machinery. However, Fibocom Wireless is 1.02 times less risky than Tjk Machinery. It trades about 0.03 of its potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about 0.03 per unit of risk. If you would invest  1,584  in Fibocom Wireless on October 4, 2024 and sell it today you would earn a total of  338.00  from holding Fibocom Wireless or generate 21.34% return on investment over 90 days.

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

Fibocom Wireless  vs.  Tjk Machinery Tianjin

Fibocom Wireless

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fibocom Wireless are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibocom Wireless sustained solid returns over the last few months and may actually be approaching a breakup point.

Tjk Machinery Tianjin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tjk Machinery Tianjin 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.

Pair Trading with Fibocom Wireless and Tjk Machinery

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

The idea behind Fibocom Wireless and Tjk Machinery Tianjin 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.