Correlation Between Falcon Power and Li Peng
Can any of the company-specific risk be diversified away by investing in both Falcon Power and Li Peng 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 Falcon Power and Li Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Power Co and Li Peng Enterprise, you can compare the effects of market volatilities on Falcon Power and Li Peng 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 Falcon Power with a short position of Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and Li Peng.
Diversification Opportunities for Falcon Power and Li Peng
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and 1447 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise and Falcon Power 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 Falcon Power Co are associated (or correlated) with Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of Falcon Power i.e., Falcon Power and Li Peng go up and down completely randomly.
Pair Corralation between Falcon Power and Li Peng
Assuming the 90 days trading horizon Falcon Power Co is expected to under-perform the Li Peng. In addition to that, Falcon Power is 1.2 times more volatile than Li Peng Enterprise. It trades about -0.08 of its total potential returns per unit of risk. Li Peng Enterprise is currently generating about -0.08 per unit of volatility. If you would invest 810.00 in Li Peng Enterprise on August 28, 2024 and sell it today you would lose (26.00) from holding Li Peng Enterprise or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Power Co vs. Li Peng Enterprise
Performance |
| Timeline |
| Falcon Power |
| Li Peng Enterprise |
Falcon Power and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Power and Li Peng
The main advantage of trading using opposite Falcon Power and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power position performs unexpectedly, Li Peng 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 Li Peng will offset losses from the drop in Li Peng's long position.| Falcon Power vs. Sunny Friend Environmental | Falcon Power vs. TTET Union Corp | Falcon Power vs. ECOVE Environment Corp | Falcon Power vs. Yulon Finance Corp |
| Li Peng vs. Taiwan Semiconductor Manufacturing | Li Peng vs. Hon Hai Precision | Li Peng vs. MediaTek | Li Peng vs. Chunghwa Telecom Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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