Correlation Between Fiberhome Telecommunicatio and Shanghai Ziyan
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Shanghai Ziyan Foods, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Shanghai Ziyan 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 Shanghai Ziyan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Shanghai Ziyan.
Diversification Opportunities for Fiberhome Telecommunicatio and Shanghai Ziyan
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fiberhome and Shanghai is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Shanghai Ziyan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Ziyan Foods 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 Shanghai Ziyan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Ziyan Foods has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Shanghai Ziyan go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Shanghai Ziyan
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 0.75 times more return on investment than Shanghai Ziyan. However, Fiberhome Telecommunication Technologies is 1.33 times less risky than Shanghai Ziyan. It trades about 0.04 of its potential returns per unit of risk. Shanghai Ziyan Foods is currently generating about -0.03 per unit of risk. If you would invest 1,823 in Fiberhome Telecommunication Technologies on October 30, 2024 and sell it today you would earn a total of 67.00 from holding Fiberhome Telecommunication Technologies or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Shanghai Ziyan Foods
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Shanghai Ziyan Foods |
Fiberhome Telecommunicatio and Shanghai Ziyan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Shanghai Ziyan
The main advantage of trading using opposite Fiberhome Telecommunicatio and Shanghai Ziyan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Shanghai Ziyan 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 Shanghai Ziyan will offset losses from the drop in Shanghai Ziyan's long position.The idea behind Fiberhome Telecommunication Technologies and Shanghai Ziyan Foods 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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