Correlation Between Fangdd Network and New Concept

Can any of the company-specific risk be diversified away by investing in both Fangdd Network and New Concept 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 Fangdd Network and New Concept into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fangdd Network Group and New Concept Energy, you can compare the effects of market volatilities on Fangdd Network and New Concept 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 Fangdd Network with a short position of New Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fangdd Network and New Concept.

Diversification Opportunities for Fangdd Network and New Concept

0.02

Correlation Coefficient

Fangdd Network  New Concept

Significant diversification

The 3 months correlation between Fangdd and New is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fangdd Network Group and New Concept Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Concept Energy and Fangdd Network 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 Fangdd Network Group are associated (or correlated) with New Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Concept Energy has no effect on the direction of Fangdd Network i.e., Fangdd Network and New Concept go up and down completely randomly.

Pair Corralation between Fangdd Network and New Concept

Considering the 90-day investment horizon Fangdd Network Group is expected to under-perform the New Concept. In addition to that, Fangdd Network is 1.59 times more volatile than New Concept Energy. It trades about -0.19 of its total potential returns per unit of risk. New Concept Energy is currently generating about 0.07 per unit of volatility. If you would invest  117.00  in New Concept Energy on October 26, 2024 and sell it today you would earn a total of  4.00  from holding New Concept Energy or generate 3.42% return on investment over 90 days.

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

Fangdd Network Group  vs.  New Concept Energy

Fangdd Network Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fangdd Network Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

New Concept Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Concept Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, New Concept is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fangdd Network and New Concept

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

The idea behind Fangdd Network Group and New Concept Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.