Correlation Between Sealed Air and Fuyao Glass

Can any of the company-specific risk be diversified away by investing in both Sealed Air and Fuyao Glass 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 Sealed Air and Fuyao Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sealed Air and Fuyao Glass Industry, you can compare the effects of market volatilities on Sealed Air and Fuyao Glass 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 Sealed Air with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Fuyao Glass.

Diversification Opportunities for Sealed Air and Fuyao Glass

0.18

Correlation Coefficient

Sealed Air  Fuyao Glass

Average diversification

The 3 months correlation between Sealed and Fuyao is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry and Sealed Air 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 Sealed Air are associated (or correlated) with Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of Sealed Air i.e., Sealed Air and Fuyao Glass go up and down completely randomly.

Pair Corralation between Sealed Air and Fuyao Glass

Considering the 90-day investment horizon Sealed Air is expected to under-perform the Fuyao Glass. In addition to that, Sealed Air is 5.82 times more volatile than Fuyao Glass Industry. It trades about -0.1 of its total potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.09 per unit of volatility. If you would invest  167.00  in Fuyao Glass Industry on December 19, 2024 and sell it today you would earn a total of  3.00  from holding Fuyao Glass Industry or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Sealed Air  vs.  Fuyao Glass Industry

Sealed Air

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sealed Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fuyao Glass Industry

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fuyao Glass is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sealed Air and Fuyao Glass

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

The idea behind Sealed Air and Fuyao Glass Industry 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.