Correlation Between Fulgent Sun and Asia Vital

Can any of the company-specific risk be diversified away by investing in both Fulgent Sun and Asia Vital 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 Fulgent Sun and Asia Vital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fulgent Sun International and Asia Vital Components, you can compare the effects of market volatilities on Fulgent Sun and Asia Vital 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 Fulgent Sun with a short position of Asia Vital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulgent Sun and Asia Vital.

Diversification Opportunities for Fulgent Sun and Asia Vital

-0.54

Correlation Coefficient

Fulgent Sun  Asia Vital

Excellent diversification

The 3 months correlation between Fulgent and Asia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Sun International and Asia Vital Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Vital Components and Fulgent Sun 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 Fulgent Sun International are associated (or correlated) with Asia Vital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Vital Components has no effect on the direction of Fulgent Sun i.e., Fulgent Sun and Asia Vital go up and down completely randomly.

Pair Corralation between Fulgent Sun and Asia Vital

Assuming the 90 days trading horizon Fulgent Sun International is expected to generate 1.15 times more return on investment than Asia Vital. However, Fulgent Sun is 1.15 times more volatile than Asia Vital Components. It trades about 0.04 of its potential returns per unit of risk. Asia Vital Components is currently generating about 0.01 per unit of risk. If you would invest  11,250  in Fulgent Sun International on September 18, 2024 and sell it today you would earn a total of  200.00  from holding Fulgent Sun International or generate 1.78% return on investment over 90 days.

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

Fulgent Sun International  vs.  Asia Vital Components

Fulgent Sun International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulgent Sun International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fulgent Sun is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Asia Vital Components

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Vital Components are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asia Vital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fulgent Sun and Asia Vital

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

The idea behind Fulgent Sun International and Asia Vital Components 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.