Correlation Between Montage Technology and Hubei Forbon

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

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

Diversification Opportunities for Montage Technology and Hubei Forbon

0.5

Correlation Coefficient

Montage Technology  Hubei Forbon

Very weak diversification

The 3 months correlation between Montage and Hubei is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Montage Technology Co and Hubei Forbon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Forbon Technology and Montage Technology 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 Montage Technology Co are associated (or correlated) with Hubei Forbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Forbon Technology has no effect on the direction of Montage Technology i.e., Montage Technology and Hubei Forbon go up and down completely randomly.

Pair Corralation between Montage Technology and Hubei Forbon

Assuming the 90 days trading horizon Montage Technology Co is expected to generate 1.23 times more return on investment than Hubei Forbon. However, Montage Technology is 1.23 times more volatile than Hubei Forbon Technology. It trades about 0.09 of its potential returns per unit of risk. Hubei Forbon Technology is currently generating about 0.09 per unit of risk. If you would invest  5,294  in Montage Technology Co on October 3, 2024 and sell it today you would earn a total of  1,496  from holding Montage Technology Co or generate 28.26% return on investment over 90 days.

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

Montage Technology Co  vs.  Hubei Forbon Technology

Montage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montage 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.

Hubei Forbon Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hubei Forbon Technology 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 Montage Technology and Hubei Forbon

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

The idea behind Montage Technology Co and Hubei Forbon 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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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.