Correlation Between Hangzhou Arcvideo and FSPG Hi

Can any of the company-specific risk be diversified away by investing in both Hangzhou Arcvideo and FSPG Hi 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 Hangzhou Arcvideo and FSPG Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hangzhou Arcvideo and FSPG Hi

0.44

Correlation Coefficient

Hangzhou Arcvideo  FSPG Hi

Very weak diversification

The 3 months correlation between Hangzhou and FSPG is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Arcvideo Technology and FSPG Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSPG Hi Tech and Hangzhou Arcvideo 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 Hangzhou Arcvideo Technology are associated (or correlated) with FSPG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSPG Hi Tech has no effect on the direction of Hangzhou Arcvideo i.e., Hangzhou Arcvideo and FSPG Hi go up and down completely randomly.

Pair Corralation between Hangzhou Arcvideo and FSPG Hi

Assuming the 90 days trading horizon Hangzhou Arcvideo Technology is expected to under-perform the FSPG Hi. In addition to that, Hangzhou Arcvideo is 1.43 times more volatile than FSPG Hi Tech Co. It trades about -0.32 of its total potential returns per unit of risk. FSPG Hi Tech Co is currently generating about -0.35 per unit of volatility. If you would invest  684.00  in FSPG Hi Tech Co on October 8, 2024 and sell it today you would lose (124.00) from holding FSPG Hi Tech Co or give up 18.13% of portfolio value over 90 days.

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

Hangzhou Arcvideo Technology  vs.  FSPG Hi Tech Co

Hangzhou Arcvideo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou Arcvideo Technology 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.

FSPG Hi Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FSPG Hi Tech Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FSPG Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hangzhou Arcvideo and FSPG Hi

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

The idea behind Hangzhou Arcvideo Technology and FSPG Hi Tech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.