Correlation Between Fiberhome Telecommunicatio and Hunan Tyen
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Hunan Tyen Machinery, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Hunan Tyen 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 Hunan Tyen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Hunan Tyen.
Diversification Opportunities for Fiberhome Telecommunicatio and Hunan Tyen
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fiberhome and Hunan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Hunan Tyen Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Tyen 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 Hunan Tyen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Tyen Machinery has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Hunan Tyen go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Hunan Tyen
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 0.92 times more return on investment than Hunan Tyen. However, Fiberhome Telecommunication Technologies is 1.09 times less risky than Hunan Tyen. It trades about 0.03 of its potential returns per unit of risk. Hunan Tyen Machinery is currently generating about 0.01 per unit of risk. If you would invest 1,428 in Fiberhome Telecommunication Technologies on August 25, 2024 and sell it today you would earn a total of 370.00 from holding Fiberhome Telecommunication Technologies or generate 25.91% 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. Hunan Tyen Machinery
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Hunan Tyen Machinery |
Fiberhome Telecommunicatio and Hunan Tyen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Hunan Tyen
The main advantage of trading using opposite Fiberhome Telecommunicatio and Hunan Tyen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Hunan Tyen 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 Hunan Tyen will offset losses from the drop in Hunan Tyen's long position.The idea behind Fiberhome Telecommunication Technologies and Hunan Tyen 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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