Correlation Between Fibocom Wireless and Neway Valve

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

By analyzing existing cross correlation between Fibocom Wireless and Neway Valve suzhou, you can compare the effects of market volatilities on Fibocom Wireless and Neway Valve 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 Neway Valve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fibocom Wireless and Neway Valve.

Diversification Opportunities for Fibocom Wireless and Neway Valve

0.86

Correlation Coefficient

Fibocom Wireless  Neway Valve

Very poor diversification

The 3 months correlation between Fibocom and Neway is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fibocom Wireless and Neway Valve suzhou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neway Valve suzhou 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 Neway Valve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neway Valve suzhou has no effect on the direction of Fibocom Wireless i.e., Fibocom Wireless and Neway Valve go up and down completely randomly.

Pair Corralation between Fibocom Wireless and Neway Valve

Assuming the 90 days trading horizon Fibocom Wireless is expected to generate 2.31 times more return on investment than Neway Valve. However, Fibocom Wireless is 2.31 times more volatile than Neway Valve suzhou. It trades about 0.16 of its potential returns per unit of risk. Neway Valve suzhou is currently generating about 0.11 per unit of risk. If you would invest  2,088  in Fibocom Wireless on December 24, 2024 and sell it today you would earn a total of  1,187  from holding Fibocom Wireless or generate 56.85% return on investment over 90 days.

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

Fibocom Wireless  vs.  Neway Valve suzhou

Fibocom Wireless

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fibocom Wireless are ranked lower than 12 (%) 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.

Neway Valve suzhou

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neway Valve suzhou are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neway Valve sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fibocom Wireless and Neway Valve

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

The idea behind Fibocom Wireless and Neway Valve suzhou 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.