Correlation Between China Ecotek and Fortune Electric
Can any of the company-specific risk be diversified away by investing in both China Ecotek and Fortune Electric 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 China Ecotek and Fortune Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Ecotek Corp and Fortune Electric Co, you can compare the effects of market volatilities on China Ecotek and Fortune Electric 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 China Ecotek with a short position of Fortune Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Ecotek and Fortune Electric.
Diversification Opportunities for China Ecotek and Fortune Electric
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Fortune is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Ecotek Corp and Fortune Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Electric and China Ecotek 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 China Ecotek Corp are associated (or correlated) with Fortune Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Electric has no effect on the direction of China Ecotek i.e., China Ecotek and Fortune Electric go up and down completely randomly.
Pair Corralation between China Ecotek and Fortune Electric
Assuming the 90 days trading horizon China Ecotek Corp is expected to generate 0.64 times more return on investment than Fortune Electric. However, China Ecotek Corp is 1.57 times less risky than Fortune Electric. It trades about -0.11 of its potential returns per unit of risk. Fortune Electric Co is currently generating about -0.2 per unit of risk. If you would invest 5,990 in China Ecotek Corp on January 16, 2025 and sell it today you would lose (570.00) from holding China Ecotek Corp or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Ecotek Corp vs. Fortune Electric Co
Performance |
| Timeline |
| China Ecotek Corp |
| Fortune Electric |
China Ecotek and Fortune Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Ecotek and Fortune Electric
The main advantage of trading using opposite China Ecotek and Fortune Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Ecotek position performs unexpectedly, Fortune Electric 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 Fortune Electric will offset losses from the drop in Fortune Electric's long position.| China Ecotek vs. BES Engineering Co | China Ecotek vs. Delpha Construction Co | China Ecotek vs. Da Cin Construction Co | China Ecotek vs. Kuo Yang Construction |
| Fortune Electric vs. Chung Hsin Electric Machinery | Fortune Electric vs. TECO Electric Machinery | Fortune Electric vs. Shihlin Electric Engineering | Fortune Electric vs. Allis Electric 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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