Correlation Between Shanghai CEO and Fiberhome Telecommunicatio

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

Diversification Opportunities for Shanghai CEO and Fiberhome Telecommunicatio

-0.03
  Correlation Coefficient

Good diversification

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

Pair Corralation between Shanghai CEO and Fiberhome Telecommunicatio

Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to under-perform the Fiberhome Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai CEO Environmental is 1.21 times less risky than Fiberhome Telecommunicatio. The stock trades about -0.15 of its potential returns per unit of risk. The Fiberhome Telecommunication Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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

Shanghai CEO Environmental  vs.  Fiberhome Telecommunication Te

 Performance 
       Timeline  
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 

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 and Fiberhome Telecommunicatio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shanghai CEO and Fiberhome Telecommunicatio

The main advantage of trading using opposite Shanghai CEO and Fiberhome Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai CEO position performs unexpectedly, Fiberhome Telecommunicatio 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 Fiberhome Telecommunicatio will offset losses from the drop in Fiberhome Telecommunicatio's long position.
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The idea behind Shanghai CEO Environmental and Fiberhome Telecommunication Technologies 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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