Correlation Between Chailease Holding and Fulin Plastic

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

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

Diversification Opportunities for Chailease Holding and Fulin Plastic

0.68

Correlation Coefficient

Chailease Holding  Fulin Plastic

Poor diversification

The 3 months correlation between Chailease and Fulin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chailease Holding Co 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 Chailease Holding 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 Chailease Holding Co 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 Chailease Holding i.e., Chailease Holding and Fulin Plastic go up and down completely randomly.

Pair Corralation between Chailease Holding and Fulin Plastic

Assuming the 90 days trading horizon Chailease Holding Co is expected to generate 2.81 times more return on investment than Fulin Plastic. However, Chailease Holding is 2.81 times more volatile than Fulin Plastic Industry. It trades about 0.1 of its potential returns per unit of risk. Fulin Plastic Industry is currently generating about 0.28 per unit of risk. If you would invest  11,200  in Chailease Holding Co on December 22, 2024 and sell it today you would earn a total of  1,150  from holding Chailease Holding Co or generate 10.27% return on investment over 90 days.

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

Chailease Holding Co  vs.  Fulin Plastic Industry

Chailease Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chailease Holding Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chailease Holding 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 weak basic indicators, Fulin Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chailease Holding and Fulin Plastic

The main advantage of trading using opposite Chailease Holding and Fulin Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chailease Holding 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 Chailease Holding Co 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 Anywhere module to track or share privately all of your investments from the convenience of any device.