Correlation Between Fiberhome Telecommunicatio and Shanghai Shuixing
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Shanghai Shuixing Home, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Shanghai Shuixing 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 Shuixing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Shanghai Shuixing.
Diversification Opportunities for Fiberhome Telecommunicatio and Shanghai Shuixing
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fiberhome and Shanghai is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Shanghai Shuixing Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Shuixing Home 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 Shuixing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Shuixing Home has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Shanghai Shuixing go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Shanghai Shuixing
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 1.26 times more return on investment than Shanghai Shuixing. However, Fiberhome Telecommunicatio is 1.26 times more volatile than Shanghai Shuixing Home. It trades about 0.04 of its potential returns per unit of risk. Shanghai Shuixing Home is currently generating about 0.02 per unit of risk. If you would invest 1,429 in Fiberhome Telecommunication Technologies on October 27, 2024 and sell it today you would earn a total of 571.00 from holding Fiberhome Telecommunication Technologies or generate 39.96% 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 Shuixing Home
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Shanghai Shuixing Home |
Fiberhome Telecommunicatio and Shanghai Shuixing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Shanghai Shuixing
The main advantage of trading using opposite Fiberhome Telecommunicatio and Shanghai Shuixing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Shanghai Shuixing 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 Shuixing will offset losses from the drop in Shanghai Shuixing's long position.The idea behind Fiberhome Telecommunication Technologies and Shanghai Shuixing Home 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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