Correlation Between Sihui Fuji and Biwin Storage

Can any of the company-specific risk be diversified away by investing in both Sihui Fuji and Biwin Storage 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 Sihui Fuji and Biwin Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sihui Fuji Electronics and Biwin Storage Technology, you can compare the effects of market volatilities on Sihui Fuji and Biwin Storage 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 Sihui Fuji with a short position of Biwin Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sihui Fuji and Biwin Storage.

Diversification Opportunities for Sihui Fuji and Biwin Storage

0.43

Correlation Coefficient

Sihui Fuji  Biwin Storage

Very weak diversification

The 3 months correlation between Sihui and Biwin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sihui Fuji Electronics and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology and Sihui Fuji 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 Sihui Fuji Electronics are associated (or correlated) with Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Sihui Fuji i.e., Sihui Fuji and Biwin Storage go up and down completely randomly.

Pair Corralation between Sihui Fuji and Biwin Storage

Assuming the 90 days trading horizon Sihui Fuji Electronics is expected to generate 0.96 times more return on investment than Biwin Storage. However, Sihui Fuji Electronics is 1.04 times less risky than Biwin Storage. It trades about 0.06 of its potential returns per unit of risk. Biwin Storage Technology is currently generating about -0.02 per unit of risk. If you would invest  2,682  in Sihui Fuji Electronics on October 25, 2024 and sell it today you would earn a total of  268.00  from holding Sihui Fuji Electronics or generate 9.99% return on investment over 90 days.

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

Sihui Fuji Electronics  vs.  Biwin Storage Technology

Sihui Fuji Electronics

Risk-Adjusted Performance

4 of 100

Modest

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

Biwin Storage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sihui Fuji and Biwin Storage

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

The idea behind Sihui Fuji Electronics and Biwin Storage Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.