Correlation Between Fiberhome Telecommunicatio and Guangdong Liantai
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Guangdong Liantai Environmental, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Guangdong Liantai 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 Guangdong Liantai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Guangdong Liantai.
Diversification Opportunities for Fiberhome Telecommunicatio and Guangdong Liantai
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fiberhome and Guangdong is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Guangdong Liantai Environmenta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Liantai 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 Guangdong Liantai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Liantai has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Guangdong Liantai go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and Guangdong Liantai
Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to under-perform the Guangdong Liantai. In addition to that, Fiberhome Telecommunicatio is 1.18 times more volatile than Guangdong Liantai Environmental. It trades about 0.0 of its total potential returns per unit of risk. Guangdong Liantai Environmental is currently generating about 0.25 per unit of volatility. If you would invest 391.00 in Guangdong Liantai Environmental on September 5, 2024 and sell it today you would earn a total of 48.00 from holding Guangdong Liantai Environmental or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. Guangdong Liantai Environmenta
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| Guangdong Liantai |
Fiberhome Telecommunicatio and Guangdong Liantai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and Guangdong Liantai
The main advantage of trading using opposite Fiberhome Telecommunicatio and Guangdong Liantai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Guangdong Liantai 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 Guangdong Liantai will offset losses from the drop in Guangdong Liantai's long position.The idea behind Fiberhome Telecommunication Technologies and Guangdong Liantai Environmental 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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