Correlation Between Fuyao Glass and Paragon GmbH

Can any of the company-specific risk be diversified away by investing in both Fuyao Glass and Paragon GmbH 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 Fuyao Glass and Paragon GmbH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fuyao Glass Industry and paragon GmbH Co, you can compare the effects of market volatilities on Fuyao Glass and Paragon GmbH 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 Fuyao Glass with a short position of Paragon GmbH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuyao Glass and Paragon GmbH.

Diversification Opportunities for Fuyao Glass and Paragon GmbH

-0.14

Correlation Coefficient

Fuyao Glass  Paragon GmbH

Good diversification

The 3 months correlation between Fuyao and Paragon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fuyao Glass Industry and paragon GmbH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on paragon GmbH and Fuyao Glass 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 Fuyao Glass Industry are associated (or correlated) with Paragon GmbH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of paragon GmbH has no effect on the direction of Fuyao Glass i.e., Fuyao Glass and Paragon GmbH go up and down completely randomly.

Pair Corralation between Fuyao Glass and Paragon GmbH

Assuming the 90 days horizon Fuyao Glass Industry is expected to generate 0.58 times more return on investment than Paragon GmbH. However, Fuyao Glass Industry is 1.71 times less risky than Paragon GmbH. It trades about 0.1 of its potential returns per unit of risk. paragon GmbH Co is currently generating about -0.04 per unit of risk. If you would invest  271.00  in Fuyao Glass Industry on October 22, 2024 and sell it today you would earn a total of  374.00  from holding Fuyao Glass Industry or generate 138.01% return on investment over 90 days.

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

Fuyao Glass Industry  vs.  paragon GmbH Co

Fuyao Glass Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuyao Glass Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fuyao Glass is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

paragon GmbH

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in paragon GmbH Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Paragon GmbH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fuyao Glass and Paragon GmbH

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

The idea behind Fuyao Glass Industry and paragon GmbH Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.