Correlation Between Fujian Nanwang and ROPEOK Technology

Can any of the company-specific risk be diversified away by investing in both Fujian Nanwang and ROPEOK Technology 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 Fujian Nanwang and ROPEOK Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fujian Nanwang Environment and ROPEOK Technology Group, you can compare the effects of market volatilities on Fujian Nanwang and ROPEOK Technology 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 Fujian Nanwang with a short position of ROPEOK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Nanwang and ROPEOK Technology.

Diversification Opportunities for Fujian Nanwang and ROPEOK Technology

0.67

Correlation Coefficient

Fujian Nanwang  ROPEOK Technology

Poor diversification

The 3 months correlation between Fujian and ROPEOK is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Nanwang Environment and ROPEOK Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROPEOK Technology and Fujian Nanwang 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 Fujian Nanwang Environment are associated (or correlated) with ROPEOK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROPEOK Technology has no effect on the direction of Fujian Nanwang i.e., Fujian Nanwang and ROPEOK Technology go up and down completely randomly.

Pair Corralation between Fujian Nanwang and ROPEOK Technology

Assuming the 90 days trading horizon Fujian Nanwang Environment is expected to generate 0.61 times more return on investment than ROPEOK Technology. However, Fujian Nanwang Environment is 1.64 times less risky than ROPEOK Technology. It trades about 0.04 of its potential returns per unit of risk. ROPEOK Technology Group is currently generating about -0.04 per unit of risk. If you would invest  1,255  in Fujian Nanwang Environment on October 6, 2024 and sell it today you would earn a total of  53.00  from holding Fujian Nanwang Environment or generate 4.22% return on investment over 90 days.

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

Fujian Nanwang Environment  vs.  ROPEOK Technology Group

Fujian Nanwang Envir

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Nanwang Environment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fujian Nanwang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ROPEOK Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROPEOK Technology Group 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 Fujian Nanwang and ROPEOK Technology

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

The idea behind Fujian Nanwang Environment and ROPEOK Technology Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.