Correlation Between Fuyao Glass and DALATA HOTEL
Can any of the company-specific risk be diversified away by investing in both Fuyao Glass and DALATA HOTEL 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 DALATA HOTEL 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 DALATA HOTEL, you can compare the effects of market volatilities on Fuyao Glass and DALATA HOTEL 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 DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuyao Glass and DALATA HOTEL.
Diversification Opportunities for Fuyao Glass and DALATA HOTEL
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fuyao and DALATA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fuyao Glass Industry and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL 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 DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of Fuyao Glass i.e., Fuyao Glass and DALATA HOTEL go up and down completely randomly.
Pair Corralation between Fuyao Glass and DALATA HOTEL
Assuming the 90 days horizon Fuyao Glass Industry is expected to under-perform the DALATA HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, Fuyao Glass Industry is 2.49 times less risky than DALATA HOTEL. The stock trades about -0.07 of its potential returns per unit of risk. The DALATA HOTEL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 380.00 in DALATA HOTEL on September 4, 2024 and sell it today you would earn a total of 38.00 from holding DALATA HOTEL or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fuyao Glass Industry vs. DALATA HOTEL
Performance |
| Timeline |
| Fuyao Glass Industry |
| DALATA HOTEL |
Fuyao Glass and DALATA HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuyao Glass and DALATA HOTEL
The main advantage of trading using opposite Fuyao Glass and DALATA HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuyao Glass position performs unexpectedly, DALATA HOTEL 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 DALATA HOTEL will offset losses from the drop in DALATA HOTEL's long position.| Fuyao Glass vs. DALATA HOTEL | Fuyao Glass vs. Ryanair Holdings plc | Fuyao Glass vs. INTERCONT HOTELS | Fuyao Glass vs. Sunstone Hotel Investors |
| DALATA HOTEL vs. Automatic Data Processing | DALATA HOTEL vs. DICKER DATA LTD | DALATA HOTEL vs. Public Storage | DALATA HOTEL vs. Sims Metal Management |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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