Correlation Between Fiberhome Telecommunicatio and Changsha Jingjia
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Changsha Jingjia Microelectronics, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Changsha Jingjia 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 Changsha Jingjia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Changsha Jingjia.
Diversification Opportunities for Fiberhome Telecommunicatio and Changsha Jingjia
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fiberhome and Changsha is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Changsha Jingjia Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changsha Jingjia Mic 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 Changsha Jingjia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changsha Jingjia Mic has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Changsha Jingjia go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Changsha Jingjia
Assuming the 90 days trading horizon Fiberhome Telecommunicatio is expected to generate 1.78 times less return on investment than Changsha Jingjia. But when comparing it to its historical volatility, Fiberhome Telecommunication Technologies is 1.51 times less risky than Changsha Jingjia. It trades about 0.03 of its potential returns per unit of risk. Changsha Jingjia Microelectronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,045 in Changsha Jingjia Microelectronics on October 15, 2024 and sell it today you would earn a total of 2,885 from holding Changsha Jingjia Microelectronics or generate 47.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Changsha Jingjia Microelectron
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Changsha Jingjia Mic |
Fiberhome Telecommunicatio and Changsha Jingjia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Changsha Jingjia
The main advantage of trading using opposite Fiberhome Telecommunicatio and Changsha Jingjia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Changsha Jingjia 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 Changsha Jingjia will offset losses from the drop in Changsha Jingjia's long position.The idea behind Fiberhome Telecommunication Technologies and Changsha Jingjia Microelectronics 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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