Correlation Between Fujian Oriental and Fujian Boss

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Can any of the company-specific risk be diversified away by investing in both Fujian Oriental and Fujian Boss 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 Fujian Oriental and Fujian Boss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fujian Oriental Silver and Fujian Boss Software, you can compare the effects of market volatilities on Fujian Oriental and Fujian Boss 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 Fujian Oriental with a short position of Fujian Boss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Oriental and Fujian Boss.

Diversification Opportunities for Fujian Oriental and Fujian Boss

FujianFujianDiversified AwayFujianFujianDiversified Away100%
0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fujian and Fujian is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and Fujian Boss Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Boss Software and Fujian Oriental 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 Fujian Oriental Silver are associated (or correlated) with Fujian Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Boss Software has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and Fujian Boss go up and down completely randomly.

Pair Corralation between Fujian Oriental and Fujian Boss

Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the Fujian Boss. In addition to that, Fujian Oriental is 1.24 times more volatile than Fujian Boss Software. It trades about -0.18 of its total potential returns per unit of risk. Fujian Boss Software is currently generating about 0.31 per unit of volatility. If you would invest  1,429  in Fujian Boss Software on November 20, 2024 and sell it today you would earn a total of  281.00  from holding Fujian Boss Software or generate 19.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fujian Oriental Silver  vs.  Fujian Boss Software

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010203040
JavaScript chart by amCharts 3.21.15600753 300525
       Timeline  
Fujian Oriental Silver 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fujian Oriental Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5.566.577.588.5
Fujian Boss Software 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fujian Boss Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fujian Boss is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb13141516171819

Fujian Oriental and Fujian Boss Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.69-5.01-3.33-1.650.021.533.074.66.14 0.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15600753 300525
       Returns  

Pair Trading with Fujian Oriental and Fujian Boss

The main advantage of trading using opposite Fujian Oriental and Fujian Boss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental position performs unexpectedly, Fujian Boss 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 Fujian Boss will offset losses from the drop in Fujian Boss' long position.
The idea behind Fujian Oriental Silver and Fujian Boss Software 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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