Correlation Between Fibocom Wireless and Beijing Kingsoft

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

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

Diversification Opportunities for Fibocom Wireless and Beijing Kingsoft

0.88

Correlation Coefficient

Fibocom Wireless  Beijing Kingsoft

Very poor diversification

The 3 months correlation between Fibocom and Beijing is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fibocom Wireless and Beijing Kingsoft Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Kingsoft Office 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 Beijing Kingsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Kingsoft Office has no effect on the direction of Fibocom Wireless i.e., Fibocom Wireless and Beijing Kingsoft go up and down completely randomly.

Pair Corralation between Fibocom Wireless and Beijing Kingsoft

Assuming the 90 days trading horizon Fibocom Wireless is expected to generate 1.49 times more return on investment than Beijing Kingsoft. However, Fibocom Wireless is 1.49 times more volatile than Beijing Kingsoft Office. It trades about 0.12 of its potential returns per unit of risk. Beijing Kingsoft Office is currently generating about 0.04 per unit of risk. If you would invest  2,238  in Fibocom Wireless on December 26, 2024 and sell it today you would earn a total of  830.00  from holding Fibocom Wireless or generate 37.09% 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.  Beijing Kingsoft Office

Fibocom Wireless

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fibocom Wireless are ranked lower than 9 (%) 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.

Beijing Kingsoft Office

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Fibocom Wireless and Beijing Kingsoft

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

The idea behind Fibocom Wireless and Beijing Kingsoft Office 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.