Correlation Between Flexium Interconnect and China Steel

Can any of the company-specific risk be diversified away by investing in both Flexium Interconnect and China Steel 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 Flexium Interconnect and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flexium Interconnect and China Steel Structure, you can compare the effects of market volatilities on Flexium Interconnect and China Steel 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 Flexium Interconnect with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexium Interconnect and China Steel.

Diversification Opportunities for Flexium Interconnect and China Steel

0.74

Correlation Coefficient

Flexium Interconnect  China Steel

Poor diversification

The 3 months correlation between Flexium and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Flexium Interconnect and China Steel Structure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Structure and Flexium Interconnect 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 Flexium Interconnect are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Structure has no effect on the direction of Flexium Interconnect i.e., Flexium Interconnect and China Steel go up and down completely randomly.

Pair Corralation between Flexium Interconnect and China Steel

Assuming the 90 days trading horizon Flexium Interconnect is expected to generate 1.28 times more return on investment than China Steel. However, Flexium Interconnect is 1.28 times more volatile than China Steel Structure. It trades about -0.19 of its potential returns per unit of risk. China Steel Structure is currently generating about -0.38 per unit of risk. If you would invest  6,550  in Flexium Interconnect on October 11, 2024 and sell it today you would lose (250.00) from holding Flexium Interconnect or give up 3.82% of portfolio value over 90 days.

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

Flexium Interconnect  vs.  China Steel Structure

Flexium Interconnect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flexium Interconnect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

China Steel Structure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Steel Structure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Flexium Interconnect and China Steel

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

The idea behind Flexium Interconnect and China Steel Structure 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.