Correlation Between Fiberhome Telecommunicatio and Changchun Faway
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Changchun Faway Automobile, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Changchun Faway 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 Changchun Faway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Changchun Faway.
Diversification Opportunities for Fiberhome Telecommunicatio and Changchun Faway
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fiberhome and Changchun is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Changchun Faway Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun Faway Auto 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 Changchun Faway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun Faway Auto has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Changchun Faway go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Changchun Faway
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 1.98 times more return on investment than Changchun Faway. However, Fiberhome Telecommunicatio is 1.98 times more volatile than Changchun Faway Automobile. It trades about -0.03 of its potential returns per unit of risk. Changchun Faway Automobile is currently generating about -0.16 per unit of risk. If you would invest 1,989 in Fiberhome Telecommunication Technologies on October 20, 2024 and sell it today you would lose (70.00) from holding Fiberhome Telecommunication Technologies or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Changchun Faway Automobile
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Changchun Faway Auto |
Fiberhome Telecommunicatio and Changchun Faway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Changchun Faway
The main advantage of trading using opposite Fiberhome Telecommunicatio and Changchun Faway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Changchun Faway 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 Changchun Faway will offset losses from the drop in Changchun Faway's long position.The idea behind Fiberhome Telecommunication Technologies and Changchun Faway Automobile 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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