Correlation Between Yuan High and Fulin Plastic

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

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

Diversification Opportunities for Yuan High and Fulin Plastic

0.32

Correlation Coefficient

Yuan High  Fulin Plastic

Weak diversification

The 3 months correlation between Yuan and Fulin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development 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 Yuan High 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 Yuan High Tech Development 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 Yuan High i.e., Yuan High and Fulin Plastic go up and down completely randomly.

Pair Corralation between Yuan High and Fulin Plastic

Assuming the 90 days trading horizon Yuan High Tech Development is expected to under-perform the Fulin Plastic. In addition to that, Yuan High is 6.19 times more volatile than Fulin Plastic Industry. It trades about -0.01 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 21, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Yuan High Tech Development  vs.  Fulin Plastic Industry

Yuan High Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuan High Tech Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yuan High is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 22 (%) 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 Yuan High and Fulin Plastic

The main advantage of trading using opposite Yuan High and Fulin Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuan High 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 Yuan High Tech Development 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.