Correlation Between Fiberhome Telecommunicatio and Nanjing Putian
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Nanjing Putian 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 Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Nanjing Putian.
Diversification Opportunities for Fiberhome Telecommunicatio and Nanjing Putian
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fiberhome and Nanjing is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec 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 Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Nanjing Putian go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Nanjing Putian
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to under-perform the Nanjing Putian. But the stock apears to be less risky and, when comparing its historical volatility, Fiberhome Telecommunication Technologies is 1.52 times less risky than Nanjing Putian. The stock trades about -0.04 of its potential returns per unit of risk. The Nanjing Putian Telecommunications is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Nanjing Putian Telecommunications on August 29, 2024 and sell it today you would earn a total of 39.00 from holding Nanjing Putian Telecommunications or generate 9.75% 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. Nanjing Putian Telecommunicati
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Nanjing Putian Telec |
Fiberhome Telecommunicatio and Nanjing Putian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Nanjing Putian
The main advantage of trading using opposite Fiberhome Telecommunicatio and Nanjing Putian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Nanjing Putian 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 Nanjing Putian will offset losses from the drop in Nanjing Putian's long position.The idea behind Fiberhome Telecommunication Technologies and Nanjing Putian Telecommunications 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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