Correlation Between New Era and Fulltech Fiber
Can any of the company-specific risk be diversified away by investing in both New Era and Fulltech Fiber 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 New Era and Fulltech Fiber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Era Electronics and Fulltech Fiber Glass, you can compare the effects of market volatilities on New Era and Fulltech Fiber 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 New Era with a short position of Fulltech Fiber. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Era and Fulltech Fiber.
Diversification Opportunities for New Era and Fulltech Fiber
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Fulltech is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding New Era Electronics and Fulltech Fiber Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulltech Fiber Glass and New Era 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 New Era Electronics are associated (or correlated) with Fulltech Fiber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulltech Fiber Glass has no effect on the direction of New Era i.e., New Era and Fulltech Fiber go up and down completely randomly.
Pair Corralation between New Era and Fulltech Fiber
Assuming the 90 days trading horizon New Era Electronics is expected to generate 1.25 times more return on investment than Fulltech Fiber. However, New Era is 1.25 times more volatile than Fulltech Fiber Glass. It trades about 0.13 of its potential returns per unit of risk. Fulltech Fiber Glass is currently generating about 0.07 per unit of risk. If you would invest 1,658 in New Era Electronics on September 4, 2024 and sell it today you would earn a total of 10,542 from holding New Era Electronics or generate 635.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Era Electronics vs. Fulltech Fiber Glass
Performance |
| Timeline |
| New Era Electronics |
| Fulltech Fiber Glass |
New Era and Fulltech Fiber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Era and Fulltech Fiber
The main advantage of trading using opposite New Era and Fulltech Fiber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Era position performs unexpectedly, Fulltech Fiber 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 Fulltech Fiber will offset losses from the drop in Fulltech Fiber's long position.| New Era vs. Unimicron Technology Corp | New Era vs. Nan Ya Printed | New Era vs. Elite Material Co | New Era vs. Compeq Manufacturing Co |
| Fulltech Fiber vs. New Era Electronics | Fulltech Fiber vs. Rich Development Co | Fulltech Fiber vs. Yem Chio Co | Fulltech Fiber vs. Kuo Toong International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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