Correlation Between Fiberhome Telecommunicatio and Shanghai CEO

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Can any of the company-specific risk be diversified away by investing in both Fiberhome Telecommunicatio and Shanghai CEO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fiberhome Telecommunicatio and Shanghai CEO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and Shanghai CEO Environmental, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and Shanghai CEO 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 CEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and Shanghai CEO.

Diversification Opportunities for Fiberhome Telecommunicatio and Shanghai CEO

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Fiberhome and Shanghai is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and Shanghai CEO Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai CEO Environ 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 CEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai CEO Environ has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and Shanghai CEO go up and down completely randomly.

Pair Corralation between Fiberhome Telecommunicatio and Shanghai CEO

Assuming the 90 days trading horizon Fiberhome Telecommunication Technologies is expected to generate 1.21 times more return on investment than Shanghai CEO. However, Fiberhome Telecommunicatio is 1.21 times more volatile than Shanghai CEO Environmental. It trades about 0.04 of its potential returns per unit of risk. Shanghai CEO Environmental is currently generating about -0.15 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fiberhome Telecommunication Te  vs.  Shanghai CEO Environmental

 Performance 
       Timeline  
Fiberhome Telecommunicatio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fiberhome Telecommunication Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fiberhome Telecommunicatio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Shanghai CEO Environ 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shanghai CEO Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fiberhome Telecommunicatio and Shanghai CEO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fiberhome Telecommunicatio and Shanghai CEO

The main advantage of trading using opposite Fiberhome Telecommunicatio and Shanghai CEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, Shanghai CEO 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 CEO will offset losses from the drop in Shanghai CEO's long position.
The idea behind Fiberhome Telecommunication Technologies and Shanghai CEO 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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