Correlation Between Fuyao Glass and Magna International
Can any of the company-specific risk be diversified away by investing in both Fuyao Glass and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on Fuyao Glass and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuyao Glass and Magna International.
Diversification Opportunities for Fuyao Glass and Magna International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fuyao and Magna is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fuyao Glass Industry and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Fuyao Glass i.e., Fuyao Glass and Magna International go up and down completely randomly.
Pair Corralation between Fuyao Glass and Magna International
Assuming the 90 days horizon Fuyao Glass Industry is expected to generate 0.93 times more return on investment than Magna International. However, Fuyao Glass Industry is 1.07 times less risky than Magna International. It trades about 0.15 of its potential returns per unit of risk. Magna International is currently generating about 0.09 per unit of risk. If you would invest 510.00 in Fuyao Glass Industry on September 2, 2024 and sell it today you would earn a total of 115.00 from holding Fuyao Glass Industry or generate 22.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuyao Glass Industry vs. Magna International
Performance |
| Timeline |
| Fuyao Glass Industry |
| Magna International |
Fuyao Glass and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuyao Glass and Magna International
The main advantage of trading using opposite Fuyao Glass and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuyao Glass position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| Fuyao Glass vs. PT Astra International | Fuyao Glass vs. Superior Plus Corp | Fuyao Glass vs. NMI Holdings | Fuyao Glass vs. Origin Agritech |
| Magna International vs. PT Astra International | Magna International vs. Superior Plus Corp | Magna International vs. NMI Holdings | Magna International vs. Origin Agritech |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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