Correlation Between Fbec Worldwide and Nongfu Spring

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

By analyzing existing cross correlation between Fbec Worldwide and Nongfu Spring Co, you can compare the effects of market volatilities on Fbec Worldwide and Nongfu Spring 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 Nongfu Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fbec Worldwide and Nongfu Spring.

Diversification Opportunities for Fbec Worldwide and Nongfu Spring

-0.07

Correlation Coefficient

Fbec Worldwide  Nongfu Spring

Good diversification

The 3 months correlation between Fbec and Nongfu is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fbec Worldwide and Nongfu Spring Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongfu Spring 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 Nongfu Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongfu Spring has no effect on the direction of Fbec Worldwide i.e., Fbec Worldwide and Nongfu Spring go up and down completely randomly.

Pair Corralation between Fbec Worldwide and Nongfu Spring

Given the investment horizon of 90 days Fbec Worldwide is expected to generate 14.79 times more return on investment than Nongfu Spring. However, Fbec Worldwide is 14.79 times more volatile than Nongfu Spring Co. It trades about 0.05 of its potential returns per unit of risk. Nongfu Spring Co is currently generating about 0.21 per unit of risk. If you would invest  0.07  in Fbec Worldwide on October 4, 2024 and sell it today you would lose (0.05) from holding Fbec Worldwide or give up 71.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Fbec Worldwide  vs.  Nongfu Spring Co

Fbec Worldwide

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fbec Worldwide are ranked lower than 16 (%) 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.

Nongfu Spring

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nongfu Spring Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nongfu Spring reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fbec Worldwide and Nongfu Spring

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

The idea behind Fbec Worldwide and Nongfu Spring 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.