Correlation Between Advanced Technology and Fuda Alloy
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By analyzing existing cross correlation between Advanced Technology Materials and Fuda Alloy Materials, you can compare the effects of market volatilities on Advanced Technology and Fuda Alloy 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 Advanced Technology with a short position of Fuda Alloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Fuda Alloy.
Diversification Opportunities for Advanced Technology and Fuda Alloy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Advanced and Fuda is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Fuda Alloy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuda Alloy Materials and Advanced Technology 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 Advanced Technology Materials are associated (or correlated) with Fuda Alloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuda Alloy Materials has no effect on the direction of Advanced Technology i.e., Advanced Technology and Fuda Alloy go up and down completely randomly.
Pair Corralation between Advanced Technology and Fuda Alloy
Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 1.72 times more return on investment than Fuda Alloy. However, Advanced Technology is 1.72 times more volatile than Fuda Alloy Materials. It trades about 0.14 of its potential returns per unit of risk. Fuda Alloy Materials is currently generating about -0.04 per unit of risk. If you would invest 1,085 in Advanced Technology Materials on September 1, 2024 and sell it today you would earn a total of 136.00 from holding Advanced Technology Materials or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Technology Materials vs. Fuda Alloy Materials
Performance |
| Timeline |
| Advanced Technology |
| Fuda Alloy Materials |
Advanced Technology and Fuda Alloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Technology and Fuda Alloy
The main advantage of trading using opposite Advanced Technology and Fuda Alloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Technology position performs unexpectedly, Fuda Alloy 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 Fuda Alloy will offset losses from the drop in Fuda Alloy's long position.The idea behind Advanced Technology Materials and Fuda Alloy Materials 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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Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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