Correlation Between Fujian Oriental and VT Industrial

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Can any of the company-specific risk be diversified away by investing in both Fujian Oriental and VT Industrial 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 VT Industrial 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 VT Industrial Technology, you can compare the effects of market volatilities on Fujian Oriental and VT Industrial 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 VT Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Oriental and VT Industrial.

Diversification Opportunities for Fujian Oriental and VT Industrial

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Fujian and 300707 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and VT Industrial Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VT Industrial Technology 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 VT Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VT Industrial Technology has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and VT Industrial go up and down completely randomly.

Pair Corralation between Fujian Oriental and VT Industrial

Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the VT Industrial. In addition to that, Fujian Oriental is 1.73 times more volatile than VT Industrial Technology. It trades about -0.15 of its total potential returns per unit of risk. VT Industrial Technology is currently generating about 0.11 per unit of volatility. If you would invest  1,367  in VT Industrial Technology on November 4, 2024 and sell it today you would earn a total of  69.00  from holding VT Industrial Technology or generate 5.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Fujian Oriental Silver  vs.  VT Industrial Technology

 Performance 
       Timeline  
Fujian Oriental Silver 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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.
VT Industrial Technology 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in VT Industrial Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, VT Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Fujian Oriental and VT Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fujian Oriental and VT Industrial

The main advantage of trading using opposite Fujian Oriental and VT Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental position performs unexpectedly, VT Industrial 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 VT Industrial will offset losses from the drop in VT Industrial's long position.
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The idea behind Fujian Oriental Silver and VT Industrial Technology 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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