Correlation Between Fujian Oriental and Hefei Metalforming
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By analyzing existing cross correlation between Fujian Oriental Silver and Hefei Metalforming Mach, you can compare the effects of market volatilities on Fujian Oriental and Hefei Metalforming 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 Hefei Metalforming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Oriental and Hefei Metalforming.
Diversification Opportunities for Fujian Oriental and Hefei Metalforming
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fujian and Hefei is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and Hefei Metalforming Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hefei Metalforming Mach 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 Hefei Metalforming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hefei Metalforming Mach has no effect on the direction of Fujian Oriental i.e., Fujian Oriental and Hefei Metalforming go up and down completely randomly.
Pair Corralation between Fujian Oriental and Hefei Metalforming
Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the Hefei Metalforming. In addition to that, Fujian Oriental is 1.92 times more volatile than Hefei Metalforming Mach. It trades about -0.08 of its total potential returns per unit of risk. Hefei Metalforming Mach is currently generating about 0.13 per unit of volatility. If you would invest 688.00 in Hefei Metalforming Mach on November 8, 2024 and sell it today you would earn a total of 38.00 from holding Hefei Metalforming Mach or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Oriental Silver vs. Hefei Metalforming Mach
Performance |
| Timeline |
| Fujian Oriental Silver |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hefei Metalforming Mach |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fujian Oriental and Hefei Metalforming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Oriental and Hefei Metalforming
The main advantage of trading using opposite Fujian Oriental and Hefei Metalforming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental position performs unexpectedly, Hefei Metalforming 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 Hefei Metalforming will offset losses from the drop in Hefei Metalforming's long position.The idea behind Fujian Oriental Silver and Hefei Metalforming Mach 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.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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