Correlation Between Fiberhome Telecommunicatio and Zhongtong Guomai
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Zhongtong Guomai Communication, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Zhongtong Guomai 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 Zhongtong Guomai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Zhongtong Guomai.
Diversification Opportunities for Fiberhome Telecommunicatio and Zhongtong Guomai
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fiberhome and Zhongtong is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Zhongtong Guomai Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongtong Guomai Com 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 Zhongtong Guomai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongtong Guomai Com has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Zhongtong Guomai go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Zhongtong Guomai
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 1.55 times more return on investment than Zhongtong Guomai. However, Fiberhome Telecommunicatio is 1.55 times more volatile than Zhongtong Guomai Communication. It trades about 0.32 of its potential returns per unit of risk. Zhongtong Guomai Communication is currently generating about 0.41 per unit of risk. If you would invest 1,937 in Fiberhome Telecommunication Technologies on December 1, 2024 and sell it today you would earn a total of 513.00 from holding Fiberhome Telecommunication Technologies or generate 26.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Zhongtong Guomai Communication
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Zhongtong Guomai Com |
Fiberhome Telecommunicatio and Zhongtong Guomai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Zhongtong Guomai
The main advantage of trading using opposite Fiberhome Telecommunicatio and Zhongtong Guomai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Zhongtong Guomai 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 Zhongtong Guomai will offset losses from the drop in Zhongtong Guomai's long position.The idea behind Fiberhome Telecommunication Technologies and Zhongtong Guomai Communication 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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