Correlation Between Fiberhome Telecommunicatio and Ningbo Construction
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Ningbo Construction Co, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Ningbo Construction 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 Ningbo Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Ningbo Construction.
Diversification Opportunities for Fiberhome Telecommunicatio and Ningbo Construction
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fiberhome and Ningbo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Ningbo Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Construction 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 Ningbo Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Construction has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Ningbo Construction go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Ningbo Construction
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 1.06 times more return on investment than Ningbo Construction. However, Fiberhome Telecommunicatio is 1.06 times more volatile than Ningbo Construction Co. It trades about 0.04 of its potential returns per unit of risk. Ningbo Construction Co is currently generating about 0.03 per unit of risk. If you would invest 1,311 in Fiberhome Telecommunication Technologies on September 14, 2024 and sell it today you would earn a total of 556.00 from holding Fiberhome Telecommunication Technologies or generate 42.41% 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. Ningbo Construction Co
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Ningbo Construction |
Fiberhome Telecommunicatio and Ningbo Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Ningbo Construction
The main advantage of trading using opposite Fiberhome Telecommunicatio and Ningbo Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Ningbo Construction 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 Ningbo Construction will offset losses from the drop in Ningbo Construction's long position.The idea behind Fiberhome Telecommunication Technologies and Ningbo Construction Co 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.
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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