Correlation Between Fbec Worldwide and China Health

Can any of the company-specific risk be diversified away by investing in both Fbec Worldwide and China Health 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 Fbec Worldwide and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fbec Worldwide and China Health Industries, you can compare the effects of market volatilities on Fbec Worldwide and China Health 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 Fbec Worldwide with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fbec Worldwide and China Health.

Diversification Opportunities for Fbec Worldwide and China Health

0.14

Correlation Coefficient

Fbec Worldwide  China Health

Average diversification

The 3 months correlation between Fbec and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fbec Worldwide and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries and Fbec Worldwide 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 Fbec Worldwide are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Industries has no effect on the direction of Fbec Worldwide i.e., Fbec Worldwide and China Health go up and down completely randomly.

Pair Corralation between Fbec Worldwide and China Health

Given the investment horizon of 90 days Fbec Worldwide is expected to generate 2.13 times more return on investment than China Health. However, Fbec Worldwide is 2.13 times more volatile than China Health Industries. It trades about 0.13 of its potential returns per unit of risk. China Health Industries is currently generating about 0.06 per unit of risk. If you would invest  0.03  in Fbec Worldwide on September 12, 2024 and sell it today you would earn a total of  0.01  from holding Fbec Worldwide or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Fbec Worldwide  vs.  China Health Industries

Fbec Worldwide

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fbec Worldwide are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Fbec Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

China Health Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Health Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Fbec Worldwide and China Health

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

The idea behind Fbec Worldwide and China Health Industries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.