Correlation Between Fiberhome Telecommunicatio and Jilin Chemical
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Jilin Chemical Fibre, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Jilin Chemical 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 Fiberhome Telecommunicatio with a short position of Jilin Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Jilin Chemical.
Diversification Opportunities for Fiberhome Telecommunicatio and Jilin Chemical
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fiberhome and Jilin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Jilin Chemical Fibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin Chemical Fibre and Fiberhome Telecommunicatio 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 Fiberhome Telecommunication Technologies are associated (or correlated) with Jilin Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin Chemical Fibre has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Jilin Chemical go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Jilin Chemical
Assuming the 90 days trading horizon Fiberhome Telecommunicatio is expected to generate 2.12 times less return on investment than Jilin Chemical. But when comparing it to its historical volatility, Fiberhome Telecommunication Technologies is 1.29 times less risky than Jilin Chemical. It trades about 0.13 of its potential returns per unit of risk. Jilin Chemical Fibre is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Jilin Chemical Fibre on August 24, 2024 and sell it today you would earn a total of 57.00 from holding Jilin Chemical Fibre or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Jilin Chemical Fibre
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Jilin Chemical Fibre |
Fiberhome Telecommunicatio and Jilin Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Jilin Chemical
The main advantage of trading using opposite Fiberhome Telecommunicatio and Jilin Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Jilin Chemical 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 Jilin Chemical will offset losses from the drop in Jilin Chemical's long position.The idea behind Fiberhome Telecommunication Technologies and Jilin Chemical Fibre pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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