Correlation Between FitLife Brands, and Hongli Group

Can any of the company-specific risk be diversified away by investing in both FitLife Brands, and Hongli Group 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 FitLife Brands, and Hongli Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FitLife Brands, Common and Hongli Group Ordinary, you can compare the effects of market volatilities on FitLife Brands, and Hongli Group 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 FitLife Brands, with a short position of Hongli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FitLife Brands, and Hongli Group.

Diversification Opportunities for FitLife Brands, and Hongli Group

0.01

Correlation Coefficient

FitLife Brands,  Hongli Group

Significant diversification

The 3 months correlation between FitLife and Hongli is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common and Hongli Group Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongli Group Ordinary and FitLife Brands, 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 FitLife Brands, Common are associated (or correlated) with Hongli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongli Group Ordinary has no effect on the direction of FitLife Brands, i.e., FitLife Brands, and Hongli Group go up and down completely randomly.

Pair Corralation between FitLife Brands, and Hongli Group

Given the investment horizon of 90 days FitLife Brands, Common is expected to under-perform the Hongli Group. But the stock apears to be less risky and, when comparing its historical volatility, FitLife Brands, Common is 1.43 times less risky than Hongli Group. The stock trades about -0.15 of its potential returns per unit of risk. The Hongli Group Ordinary is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Hongli Group Ordinary on December 28, 2024 and sell it today you would lose (13.00) from holding Hongli Group Ordinary or give up 9.15% of portfolio value over 90 days.

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

FitLife Brands, Common  vs.  Hongli Group Ordinary

FitLife Brands, Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days FitLife Brands, Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hongli Group Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hongli Group Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Hongli Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FitLife Brands, and Hongli Group

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

The idea behind FitLife Brands, Common and Hongli Group Ordinary 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..