Correlation Between Zhuzhou CRRC and Fibocom Wireless

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Can any of the company-specific risk be diversified away by investing in both Zhuzhou CRRC and Fibocom Wireless 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 Zhuzhou CRRC and Fibocom Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhuzhou CRRC Times and Fibocom Wireless, you can compare the effects of market volatilities on Zhuzhou CRRC and Fibocom Wireless 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 Zhuzhou CRRC with a short position of Fibocom Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuzhou CRRC and Fibocom Wireless.

Diversification Opportunities for Zhuzhou CRRC and Fibocom Wireless

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Zhuzhou and Fibocom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zhuzhou CRRC Times and Fibocom Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibocom Wireless and Zhuzhou CRRC 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 Zhuzhou CRRC Times are associated (or correlated) with Fibocom Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibocom Wireless has no effect on the direction of Zhuzhou CRRC i.e., Zhuzhou CRRC and Fibocom Wireless go up and down completely randomly.

Pair Corralation between Zhuzhou CRRC and Fibocom Wireless

Assuming the 90 days trading horizon Zhuzhou CRRC Times is expected to under-perform the Fibocom Wireless. But the stock apears to be less risky and, when comparing its historical volatility, Zhuzhou CRRC Times is 1.63 times less risky than Fibocom Wireless. The stock trades about -0.16 of its potential returns per unit of risk. The Fibocom Wireless is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,770  in Fibocom Wireless on October 7, 2024 and sell it today you would earn a total of  48.00  from holding Fibocom Wireless or generate 2.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Zhuzhou CRRC Times  vs.  Fibocom Wireless

 Performance 
       Timeline  
Zhuzhou CRRC Times 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zhuzhou CRRC Times 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.
Fibocom Wireless 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fibocom Wireless are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibocom Wireless may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zhuzhou CRRC and Fibocom Wireless Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zhuzhou CRRC and Fibocom Wireless

The main advantage of trading using opposite Zhuzhou CRRC and Fibocom Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhuzhou CRRC position performs unexpectedly, Fibocom Wireless 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 Fibocom Wireless will offset losses from the drop in Fibocom Wireless' long position.
The idea behind Zhuzhou CRRC Times and Fibocom Wireless 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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