Correlation Between Gloria Material and Fulin Plastic

Can any of the company-specific risk be diversified away by investing in both Gloria Material and Fulin Plastic 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 Gloria Material and Fulin Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gloria Material Technology and Fulin Plastic Industry, you can compare the effects of market volatilities on Gloria Material and Fulin Plastic 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 Gloria Material with a short position of Fulin Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gloria Material and Fulin Plastic.

Diversification Opportunities for Gloria Material and Fulin Plastic

0.6

Correlation Coefficient

Gloria Material  Fulin Plastic

Poor diversification

The 3 months correlation between Gloria and Fulin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gloria Material Technology and Fulin Plastic Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulin Plastic Industry and Gloria Material 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 Gloria Material Technology are associated (or correlated) with Fulin Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulin Plastic Industry has no effect on the direction of Gloria Material i.e., Gloria Material and Fulin Plastic go up and down completely randomly.

Pair Corralation between Gloria Material and Fulin Plastic

Assuming the 90 days trading horizon Gloria Material is expected to generate 1.69 times less return on investment than Fulin Plastic. In addition to that, Gloria Material is 1.71 times more volatile than Fulin Plastic Industry. It trades about 0.1 of its total potential returns per unit of risk. Fulin Plastic Industry is currently generating about 0.28 per unit of volatility. If you would invest  6,730  in Fulin Plastic Industry on December 23, 2024 and sell it today you would earn a total of  710.00  from holding Fulin Plastic Industry or generate 10.55% return on investment over 90 days.

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

Gloria Material Technology  vs.  Fulin Plastic Industry

Gloria Material Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gloria Material Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gloria Material may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fulin Plastic Industry

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fulin Plastic Industry are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fulin Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gloria Material and Fulin Plastic

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

The idea behind Gloria Material Technology and Fulin Plastic Industry 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.