Correlation Between Longxing Chemical and FSPG Hi-Tech
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By analyzing existing cross correlation between Longxing Chemical Stock and FSPG Hi Tech Co, you can compare the effects of market volatilities on Longxing Chemical and FSPG Hi-Tech 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 Longxing Chemical with a short position of FSPG Hi-Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longxing Chemical and FSPG Hi-Tech.
Diversification Opportunities for Longxing Chemical and FSPG Hi-Tech
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Longxing and FSPG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Longxing Chemical Stock and FSPG Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSPG Hi Tech and Longxing Chemical 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 Longxing Chemical Stock are associated (or correlated) with FSPG Hi-Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSPG Hi Tech has no effect on the direction of Longxing Chemical i.e., Longxing Chemical and FSPG Hi-Tech go up and down completely randomly.
Pair Corralation between Longxing Chemical and FSPG Hi-Tech
Assuming the 90 days trading horizon Longxing Chemical is expected to generate 1.64 times less return on investment than FSPG Hi-Tech. But when comparing it to its historical volatility, Longxing Chemical Stock is 1.42 times less risky than FSPG Hi-Tech. It trades about 0.1 of its potential returns per unit of risk. FSPG Hi Tech Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 356.00 in FSPG Hi Tech Co on November 3, 2024 and sell it today you would earn a total of 202.00 from holding FSPG Hi Tech Co or generate 56.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Longxing Chemical Stock vs. FSPG Hi Tech Co
Performance |
| Timeline |
| Longxing Chemical Stock |
| FSPG Hi Tech |
Longxing Chemical and FSPG Hi-Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longxing Chemical and FSPG Hi-Tech
The main advantage of trading using opposite Longxing Chemical and FSPG Hi-Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longxing Chemical position performs unexpectedly, FSPG Hi-Tech 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 FSPG Hi-Tech will offset losses from the drop in FSPG Hi-Tech's long position.The idea behind Longxing Chemical Stock and FSPG Hi Tech Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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