Correlation Between FDC International and Wonderful
Can any of the company-specific risk be diversified away by investing in both FDC International and Wonderful 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 FDC International and Wonderful into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FDC International Hotels and Wonderful Hi Tech Co, you can compare the effects of market volatilities on FDC International and Wonderful 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 FDC International with a short position of Wonderful. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDC International and Wonderful.
Diversification Opportunities for FDC International and Wonderful
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between FDC and Wonderful is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FDC International Hotels and Wonderful Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonderful Hi Tech and FDC International 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 FDC International Hotels are associated (or correlated) with Wonderful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonderful Hi Tech has no effect on the direction of FDC International i.e., FDC International and Wonderful go up and down completely randomly.
Pair Corralation between FDC International and Wonderful
Assuming the 90 days trading horizon FDC International Hotels is expected to generate 0.42 times more return on investment than Wonderful. However, FDC International Hotels is 2.37 times less risky than Wonderful. It trades about 0.16 of its potential returns per unit of risk. Wonderful Hi Tech Co is currently generating about -0.02 per unit of risk. If you would invest 5,900 in FDC International Hotels on September 1, 2024 and sell it today you would earn a total of 270.00 from holding FDC International Hotels or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FDC International Hotels vs. Wonderful Hi Tech Co
Performance |
| Timeline |
| FDC International Hotels |
| Wonderful Hi Tech |
FDC International and Wonderful Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FDC International and Wonderful
The main advantage of trading using opposite FDC International and Wonderful positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDC International position performs unexpectedly, Wonderful 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 Wonderful will offset losses from the drop in Wonderful's long position.| FDC International vs. Chaintech Technology Corp | FDC International vs. AVerMedia Technologies | FDC International vs. Avision | FDC International vs. Clevo Co |
| Wonderful vs. Accton Technology Corp | Wonderful vs. HTC Corp | Wonderful vs. Wistron NeWeb Corp | Wonderful vs. Arcadyan Technology Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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