Correlation Between Fiberhome Telecommunicatio and Lonkey Industrial
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Lonkey Industrial Co, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Lonkey Industrial 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 Fiberhome Telecommunicatio with a short position of Lonkey Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Lonkey Industrial.
Diversification Opportunities for Fiberhome Telecommunicatio and Lonkey Industrial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fiberhome and Lonkey is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Lonkey Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonkey Industrial and Fiberhome Telecommunicatio 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 Fiberhome Telecommunication Technologies are associated (or correlated) with Lonkey Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonkey Industrial has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Lonkey Industrial go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Lonkey Industrial
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 0.71 times more return on investment than Lonkey Industrial. However, Fiberhome Telecommunication Technologies is 1.41 times less risky than Lonkey Industrial. It trades about 0.2 of its potential returns per unit of risk. Lonkey Industrial Co is currently generating about 0.06 per unit of risk. If you would invest 1,758 in Fiberhome Telecommunication Technologies on September 25, 2024 and sell it today you would earn a total of 144.00 from holding Fiberhome Telecommunication Technologies or generate 8.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fiberhome Telecommunication Te vs. Lonkey Industrial Co
Performance |
Timeline |
Fiberhome Telecommunicatio |
Lonkey Industrial |
Fiberhome Telecommunicatio and Lonkey Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fiberhome Telecommunicatio and Lonkey Industrial
The main advantage of trading using opposite Fiberhome Telecommunicatio and Lonkey Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Lonkey Industrial 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 Lonkey Industrial will offset losses from the drop in Lonkey Industrial's long position.The idea behind Fiberhome Telecommunication Technologies and Lonkey Industrial 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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Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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