Correlation Between Fiberhome Telecommunicatio and China Satellite
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and China Satellite Communications, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and China Satellite 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 China Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and China Satellite.
Diversification Opportunities for Fiberhome Telecommunicatio and China Satellite
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fiberhome and China is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and China Satellite Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Satellite Comm 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 China Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Satellite Comm has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and China Satellite go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and China Satellite
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to under-perform the China Satellite. But the stock apears to be less risky and, when comparing its historical volatility, Fiberhome Telecommunication Technologies is 2.45 times less risky than China Satellite. The stock trades about -0.01 of its potential returns per unit of risk. The China Satellite Communications is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,690 in China Satellite Communications on September 4, 2024 and sell it today you would earn a total of 610.00 from holding China Satellite Communications or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. China Satellite Communications
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| China Satellite Comm |
Fiberhome Telecommunicatio and China Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and China Satellite
The main advantage of trading using opposite Fiberhome Telecommunicatio and China Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, China Satellite 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 China Satellite will offset losses from the drop in China Satellite's long position.The idea behind Fiberhome Telecommunication Technologies and China Satellite Communications 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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