Correlation Between Fiberhome Telecommunicatio and Advanced Technology

Can any of the company-specific risk be diversified away by investing in both Fiberhome Telecommunicatio and Advanced Technology 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 Fiberhome Telecommunicatio and Advanced Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Advanced Technology Materials, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Advanced Technology 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 Advanced Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Advanced Technology.

Diversification Opportunities for Fiberhome Telecommunicatio and Advanced Technology

0.52

Correlation Coefficient

Fiberhome Telecommunicatio  Advanced Technology

Very weak diversification

The 3 months correlation between Fiberhome and Advanced is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Advanced Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Technology 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 Advanced Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Technology has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Advanced Technology go up and down completely randomly.

Pair Corralation between Fiberhome Telecommunicatio and Advanced Technology

Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to under-perform the Advanced Technology. But the stock apears to be less risky and, when comparing its historical volatility, Fiberhome Telecommunication Technologies is 1.17 times less risky than Advanced Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Advanced Technology Materials is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,051  in Advanced Technology Materials on October 6, 2024 and sell it today you would lose (2.00) from holding Advanced Technology Materials or give up 0.19% of portfolio value over 90 days.

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

Fiberhome Telecommunication Te  vs.  Advanced Technology Materials

Fiberhome Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiberhome Telecommunication Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fiberhome Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advanced Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Technology Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Advanced Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fiberhome Telecommunicatio and Advanced Technology

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

The idea behind Fiberhome Telecommunication Technologies and Advanced Technology Materials 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.