Correlation Between Fiberhome Telecommunicatio and Wuhan Yangtze
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Wuhan Yangtze Communication, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Wuhan Yangtze 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 Wuhan Yangtze. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Wuhan Yangtze.
Diversification Opportunities for Fiberhome Telecommunicatio and Wuhan Yangtze
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fiberhome and Wuhan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Wuhan Yangtze Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan Yangtze Commun 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 Wuhan Yangtze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan Yangtze Commun has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Wuhan Yangtze go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Wuhan Yangtze
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to under-perform the Wuhan Yangtze. But the stock apears to be less risky and, when comparing its historical volatility, Fiberhome Telecommunication Technologies is 2.38 times less risky than Wuhan Yangtze. The stock trades about -0.07 of its potential returns per unit of risk. The Wuhan Yangtze Communication is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,941 in Wuhan Yangtze Communication on September 1, 2024 and sell it today you would earn a total of 1,028 from holding Wuhan Yangtze Communication or generate 52.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Wuhan Yangtze Communication
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Wuhan Yangtze Commun |
Fiberhome Telecommunicatio and Wuhan Yangtze Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Wuhan Yangtze
The main advantage of trading using opposite Fiberhome Telecommunicatio and Wuhan Yangtze positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Wuhan Yangtze 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 Wuhan Yangtze will offset losses from the drop in Wuhan Yangtze's long position.The idea behind Fiberhome Telecommunication Technologies and Wuhan Yangtze Communication 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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