Correlation Between Fujian Oriental and Kweichow Moutai
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By analyzing existing cross correlation between Fujian Oriental Silver and Kweichow Moutai Co, you can compare the effects of market volatilities on Fujian Oriental and Kweichow Moutai 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 Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Oriental and Kweichow Moutai.
Diversification Opportunities for Fujian Oriental and Kweichow Moutai
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fujian and Kweichow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai 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 Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and Kweichow Moutai go up and down completely randomly.
Pair Corralation between Fujian Oriental and Kweichow Moutai
Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the Kweichow Moutai. In addition to that, Fujian Oriental is 2.29 times more volatile than Kweichow Moutai Co. It trades about -0.03 of its total potential returns per unit of risk. Kweichow Moutai Co is currently generating about -0.02 per unit of volatility. If you would invest 170,000 in Kweichow Moutai Co on September 2, 2024 and sell it today you would lose (17,426) from holding Kweichow Moutai Co or give up 10.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Oriental Silver vs. Kweichow Moutai Co
Performance |
| Timeline |
| Fujian Oriental Silver |
| Kweichow Moutai |
Fujian Oriental and Kweichow Moutai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Oriental and Kweichow Moutai
The main advantage of trading using opposite Fujian Oriental and Kweichow Moutai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental position performs unexpectedly, Kweichow Moutai 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 Kweichow Moutai will offset losses from the drop in Kweichow Moutai's long position.| Fujian Oriental vs. Weihai Honglin Electronic | Fujian Oriental vs. Hangzhou Prevail Optoelectronic | Fujian Oriental vs. Fuzhou Rockchip Electronics | Fujian Oriental vs. Bomin Electronics Co |
| Kweichow Moutai vs. Caihong Display Devices | Kweichow Moutai vs. Ningxia Building Materials | Kweichow Moutai vs. Guangzhou Tinci Materials | Kweichow Moutai vs. Cultural Investment Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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