Correlation Between Fuda Alloy and Lens Technology

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

By analyzing existing cross correlation between Fuda Alloy Materials and Lens Technology Co, you can compare the effects of market volatilities on Fuda Alloy and Lens 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 Fuda Alloy with a short position of Lens Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuda Alloy and Lens Technology.

Diversification Opportunities for Fuda Alloy and Lens Technology

0.53

Correlation Coefficient

Fuda Alloy  Lens Technology

Very weak diversification

The 3 months correlation between Fuda and Lens is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fuda Alloy Materials and Lens Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lens Technology and Fuda Alloy 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 Fuda Alloy Materials are associated (or correlated) with Lens Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lens Technology has no effect on the direction of Fuda Alloy i.e., Fuda Alloy and Lens Technology go up and down completely randomly.

Pair Corralation between Fuda Alloy and Lens Technology

Assuming the 90 days trading horizon Fuda Alloy is expected to generate 13.37 times less return on investment than Lens Technology. But when comparing it to its historical volatility, Fuda Alloy Materials is 1.02 times less risky than Lens Technology. It trades about 0.01 of its potential returns per unit of risk. Lens Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,016  in Lens Technology Co on October 4, 2024 and sell it today you would earn a total of  1,174  from holding Lens Technology Co or generate 115.55% return on investment over 90 days.

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

Fuda Alloy Materials  vs.  Lens Technology Co

Fuda Alloy Materials

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuda Alloy Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fuda Alloy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lens Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lens Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fuda Alloy and Lens Technology

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

The idea behind Fuda Alloy Materials and Lens Technology 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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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.