Correlation Between Fibocom Wireless and Zhejiang Yongjin

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

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

Diversification Opportunities for Fibocom Wireless and Zhejiang Yongjin

-0.18

Correlation Coefficient

Fibocom Wireless  Zhejiang Yongjin

Good diversification

The 3 months correlation between Fibocom and Zhejiang is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fibocom Wireless and Zhejiang Yongjin Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Yongjin Metal 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 Zhejiang Yongjin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Yongjin Metal has no effect on the direction of Fibocom Wireless i.e., Fibocom Wireless and Zhejiang Yongjin go up and down completely randomly.

Pair Corralation between Fibocom Wireless and Zhejiang Yongjin

Assuming the 90 days trading horizon Fibocom Wireless is expected to generate 2.14 times more return on investment than Zhejiang Yongjin. However, Fibocom Wireless is 2.14 times more volatile than Zhejiang Yongjin Metal. It trades about 0.14 of its potential returns per unit of risk. Zhejiang Yongjin Metal is currently generating about -0.04 per unit of risk. If you would invest  1,378  in Fibocom Wireless on October 11, 2024 and sell it today you would earn a total of  500.00  from holding Fibocom Wireless or generate 36.28% return on investment over 90 days.

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

Fibocom Wireless  vs.  Zhejiang Yongjin Metal

Fibocom Wireless

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fibocom Wireless are ranked lower than 11 (%) 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.

Zhejiang Yongjin Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Yongjin Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhejiang Yongjin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fibocom Wireless and Zhejiang Yongjin

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

The idea behind Fibocom Wireless and Zhejiang Yongjin Metal 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 Commodity Directory module to find actively traded commodities issued by global exchanges.