Correlation Between Fuyao Glass and Bridgestone
Can any of the company-specific risk be diversified away by investing in both Fuyao Glass and Bridgestone 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 Fuyao Glass and Bridgestone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuyao Glass Industry and Bridgestone, you can compare the effects of market volatilities on Fuyao Glass and Bridgestone 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 Fuyao Glass with a short position of Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuyao Glass and Bridgestone.
Diversification Opportunities for Fuyao Glass and Bridgestone
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fuyao and Bridgestone is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fuyao Glass Industry and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone and Fuyao Glass 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 Fuyao Glass Industry are associated (or correlated) with Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of Fuyao Glass i.e., Fuyao Glass and Bridgestone go up and down completely randomly.
Pair Corralation between Fuyao Glass and Bridgestone
Assuming the 90 days horizon Fuyao Glass Industry is expected to under-perform the Bridgestone. In addition to that, Fuyao Glass is 1.26 times more volatile than Bridgestone. It trades about -0.04 of its total potential returns per unit of risk. Bridgestone is currently generating about 0.03 per unit of volatility. If you would invest 1,600 in Bridgestone on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Bridgestone or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuyao Glass Industry vs. Bridgestone
Performance |
| Timeline |
| Fuyao Glass Industry |
| Bridgestone |
Fuyao Glass and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuyao Glass and Bridgestone
The main advantage of trading using opposite Fuyao Glass and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuyao Glass position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| Fuyao Glass vs. Bridgestone | Fuyao Glass vs. Superior Plus Corp | Fuyao Glass vs. SIVERS SEMICONDUCTORS AB | Fuyao Glass vs. Norsk Hydro ASA |
| Bridgestone vs. EAST SIDE GAMES | Bridgestone vs. GAMESTOP | Bridgestone vs. ANGLER GAMING PLC | Bridgestone vs. CAL MAINE FOODS |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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