Correlation Between Fuzhou Rockchip and Zhejiang Publishing

Can any of the company-specific risk be diversified away by investing in both Fuzhou Rockchip and Zhejiang Publishing 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 Fuzhou Rockchip and Zhejiang Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fuzhou Rockchip Electronics and Zhejiang Publishing Media, you can compare the effects of market volatilities on Fuzhou Rockchip and Zhejiang Publishing 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 Fuzhou Rockchip with a short position of Zhejiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuzhou Rockchip and Zhejiang Publishing.

Diversification Opportunities for Fuzhou Rockchip and Zhejiang Publishing

-0.04

Correlation Coefficient

Fuzhou Rockchip  Zhejiang Publishing

Good diversification

The 3 months correlation between Fuzhou and Zhejiang is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fuzhou Rockchip Electronics and Zhejiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Publishing Media and Fuzhou Rockchip 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 Fuzhou Rockchip Electronics are associated (or correlated) with Zhejiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Publishing Media has no effect on the direction of Fuzhou Rockchip i.e., Fuzhou Rockchip and Zhejiang Publishing go up and down completely randomly.

Pair Corralation between Fuzhou Rockchip and Zhejiang Publishing

Assuming the 90 days trading horizon Fuzhou Rockchip Electronics is expected to generate 2.35 times more return on investment than Zhejiang Publishing. However, Fuzhou Rockchip is 2.35 times more volatile than Zhejiang Publishing Media. It trades about 0.27 of its potential returns per unit of risk. Zhejiang Publishing Media is currently generating about -0.02 per unit of risk. If you would invest  8,411  in Fuzhou Rockchip Electronics on October 3, 2024 and sell it today you would earn a total of  2,595  from holding Fuzhou Rockchip Electronics or generate 30.85% return on investment over 90 days.

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

Fuzhou Rockchip Electronics  vs.  Zhejiang Publishing Media

Fuzhou Rockchip Elec

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuzhou Rockchip Electronics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fuzhou Rockchip sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fuzhou Rockchip and Zhejiang Publishing

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

The idea behind Fuzhou Rockchip Electronics and Zhejiang Publishing Media 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.