Correlation Between Fenbo Holdings and Skechers USA

Can any of the company-specific risk be diversified away by investing in both Fenbo Holdings and Skechers USA 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 Fenbo Holdings and Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fenbo Holdings Limited and Skechers USA, you can compare the effects of market volatilities on Fenbo Holdings and Skechers USA 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 Fenbo Holdings with a short position of Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fenbo Holdings and Skechers USA.

Diversification Opportunities for Fenbo Holdings and Skechers USA

0.69

Correlation Coefficient

Fenbo Holdings  Skechers USA

Poor diversification

The 3 months correlation between Fenbo and Skechers is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fenbo Holdings Limited and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA and Fenbo Holdings 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 Fenbo Holdings Limited are associated (or correlated) with Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Fenbo Holdings i.e., Fenbo Holdings and Skechers USA go up and down completely randomly.

Pair Corralation between Fenbo Holdings and Skechers USA

Given the investment horizon of 90 days Fenbo Holdings Limited is expected to under-perform the Skechers USA. In addition to that, Fenbo Holdings is 4.29 times more volatile than Skechers USA. It trades about -0.14 of its total potential returns per unit of risk. Skechers USA is currently generating about -0.02 per unit of volatility. If you would invest  6,703  in Skechers USA on September 1, 2024 and sell it today you would lose (321.00) from holding Skechers USA or give up 4.79% of portfolio value over 90 days.

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

Fenbo Holdings Limited  vs.  Skechers USA

Fenbo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fenbo Holdings Limited 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 fundamental drivers remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Skechers USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skechers USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Skechers USA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fenbo Holdings and Skechers USA

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

The idea behind Fenbo Holdings Limited and Skechers USA 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.