Correlation Between Fiberhome Telecommunicatio and Weichai Heavy
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Weichai Heavy Machinery, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Weichai Heavy 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 Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Weichai Heavy.
Diversification Opportunities for Fiberhome Telecommunicatio and Weichai Heavy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fiberhome and Weichai is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery 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 Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Weichai Heavy go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Weichai Heavy
Assuming the 90 days trading horizon Fiberhome Telecommunicatio is expected to generate 10.41 times less return on investment than Weichai Heavy. But when comparing it to its historical volatility, Fiberhome Telecommunication Technologies is 1.87 times less risky than Weichai Heavy. It trades about 0.05 of its potential returns per unit of risk. Weichai Heavy Machinery is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Weichai Heavy Machinery on October 24, 2024 and sell it today you would earn a total of 1,205 from holding Weichai Heavy Machinery or generate 114.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Weichai Heavy Machinery
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Weichai Heavy Machinery |
Fiberhome Telecommunicatio and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Weichai Heavy
The main advantage of trading using opposite Fiberhome Telecommunicatio and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Weichai Heavy 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.The idea behind Fiberhome Telecommunication Technologies and Weichai Heavy Machinery 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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