Correlation Between HaiXin Foods and Fujian Boss

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Can any of the company-specific risk be diversified away by investing in both HaiXin Foods and Fujian Boss 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 HaiXin Foods and Fujian Boss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HaiXin Foods Co and Fujian Boss Software, you can compare the effects of market volatilities on HaiXin Foods and Fujian Boss 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 HaiXin Foods with a short position of Fujian Boss. Check out your portfolio center. Please also check ongoing floating volatility patterns of HaiXin Foods and Fujian Boss.

Diversification Opportunities for HaiXin Foods and Fujian Boss

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between HaiXin and Fujian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HaiXin Foods Co and Fujian Boss Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Boss Software and HaiXin Foods 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 HaiXin Foods Co are associated (or correlated) with Fujian Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Boss Software has no effect on the direction of HaiXin Foods i.e., HaiXin Foods and Fujian Boss go up and down completely randomly.

Pair Corralation between HaiXin Foods and Fujian Boss

Assuming the 90 days trading horizon HaiXin Foods Co is expected to generate 2.29 times more return on investment than Fujian Boss. However, HaiXin Foods is 2.29 times more volatile than Fujian Boss Software. It trades about -0.04 of its potential returns per unit of risk. Fujian Boss Software is currently generating about -0.24 per unit of risk. If you would invest  461.00  in HaiXin Foods Co on October 30, 2024 and sell it today you would lose (61.00) from holding HaiXin Foods Co or give up 13.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

HaiXin Foods Co  vs.  Fujian Boss Software

 Performance 
       Timeline  
HaiXin Foods 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in HaiXin Foods Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HaiXin Foods sustained solid returns over the last few months and may actually be approaching a breakup point.
Fujian Boss Software 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fujian Boss Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HaiXin Foods and Fujian Boss Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HaiXin Foods and Fujian Boss

The main advantage of trading using opposite HaiXin Foods and Fujian Boss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HaiXin Foods position performs unexpectedly, Fujian Boss 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 Fujian Boss will offset losses from the drop in Fujian Boss' long position.
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The idea behind HaiXin Foods Co and Fujian Boss Software 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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