Correlation Between Fiberhome Telecommunicatio and Beijing Compass
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Beijing Compass Technology, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Beijing Compass 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 Beijing Compass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Beijing Compass.
Diversification Opportunities for Fiberhome Telecommunicatio and Beijing Compass
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fiberhome and Beijing is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Beijing Compass Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Compass Tech 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 Beijing Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Compass Tech has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Beijing Compass go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Beijing Compass
Assuming the 90 days trading horizon Fiberhome Telecommunicatio is expected to generate 3.03 times less return on investment than Beijing Compass. But when comparing it to its historical volatility, Fiberhome Telecommunication Technologies is 2.45 times less risky than Beijing Compass. It trades about 0.17 of its potential returns per unit of risk. Beijing Compass Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,396 in Beijing Compass Technology on September 24, 2024 and sell it today you would earn a total of 4,939 from holding Beijing Compass Technology or generate 112.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fiberhome Telecommunication Te vs. Beijing Compass Technology
Performance |
Timeline |
Fiberhome Telecommunicatio |
Beijing Compass Tech |
Fiberhome Telecommunicatio and Beijing Compass Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fiberhome Telecommunicatio and Beijing Compass
The main advantage of trading using opposite Fiberhome Telecommunicatio and Beijing Compass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Beijing Compass 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 Beijing Compass will offset losses from the drop in Beijing Compass' long position.The idea behind Fiberhome Telecommunication Technologies and Beijing Compass Technology 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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