Correlation Between Suzhou Weizhixiang and Fiberhome Telecommunicatio

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

By analyzing existing cross correlation between Suzhou Weizhixiang Food and Fiberhome Telecommunication Technologies, you can compare the effects of market volatilities on Suzhou Weizhixiang and Fiberhome Telecommunicatio 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 Suzhou Weizhixiang with a short position of Fiberhome Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Weizhixiang and Fiberhome Telecommunicatio.

Diversification Opportunities for Suzhou Weizhixiang and Fiberhome Telecommunicatio

0.65

Correlation Coefficient

Suzhou Weizhixiang  Fiberhome Telecommunicatio

Poor diversification

The 3 months correlation between Suzhou and Fiberhome is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Weizhixiang Food and Fiberhome Telecommunication Te in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiberhome Telecommunicatio and Suzhou Weizhixiang 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 Suzhou Weizhixiang Food are associated (or correlated) with Fiberhome Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiberhome Telecommunicatio has no effect on the direction of Suzhou Weizhixiang i.e., Suzhou Weizhixiang and Fiberhome Telecommunicatio go up and down completely randomly.

Pair Corralation between Suzhou Weizhixiang and Fiberhome Telecommunicatio

Assuming the 90 days trading horizon Suzhou Weizhixiang Food is expected to generate 2.35 times more return on investment than Fiberhome Telecommunicatio. However, Suzhou Weizhixiang is 2.35 times more volatile than Fiberhome Telecommunication Technologies. It trades about 0.29 of its potential returns per unit of risk. Fiberhome Telecommunication Technologies is currently generating about 0.21 per unit of risk. If you would invest  2,206  in Suzhou Weizhixiang Food on September 23, 2024 and sell it today you would earn a total of  663.00  from holding Suzhou Weizhixiang Food or generate 30.05% return on investment over 90 days.

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

Suzhou Weizhixiang Food  vs.  Fiberhome Telecommunication Te

Suzhou Weizhixiang Food

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Weizhixiang Food are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Weizhixiang sustained solid returns over the last few months and may actually be approaching a breakup point.

Fiberhome Telecommunicatio

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiberhome Telecommunication Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fiberhome Telecommunicatio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suzhou Weizhixiang and Fiberhome Telecommunicatio

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

The idea behind Suzhou Weizhixiang Food and Fiberhome Telecommunication Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.