Correlation Between FIT INVEST and Long Giang

Can any of the company-specific risk be diversified away by investing in both FIT INVEST and Long Giang 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 FIT INVEST and Long Giang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FIT INVEST JSC and Long Giang Investment, you can compare the effects of market volatilities on FIT INVEST and Long Giang 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 FIT INVEST with a short position of Long Giang. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and Long Giang.

Diversification Opportunities for FIT INVEST and Long Giang

0.6

Correlation Coefficient

FIT INVEST  Long Giang

Poor diversification

The 3 months correlation between FIT and Long is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and Long Giang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Giang Investment and FIT INVEST 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 FIT INVEST JSC are associated (or correlated) with Long Giang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Giang Investment has no effect on the direction of FIT INVEST i.e., FIT INVEST and Long Giang go up and down completely randomly.

Pair Corralation between FIT INVEST and Long Giang

Assuming the 90 days trading horizon FIT INVEST is expected to generate 4.33 times less return on investment than Long Giang. But when comparing it to its historical volatility, FIT INVEST JSC is 2.47 times less risky than Long Giang. It trades about 0.12 of its potential returns per unit of risk. Long Giang Investment is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  245,000  in Long Giang Investment on September 29, 2024 and sell it today you would earn a total of  18,000  from holding Long Giang Investment or generate 7.35% return on investment over 90 days.

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

FIT INVEST JSC  vs.  Long Giang Investment

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIT INVEST JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FIT INVEST is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Long Giang Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Long Giang Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Long Giang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FIT INVEST and Long Giang

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

The idea behind FIT INVEST JSC and Long Giang Investment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.