Correlation Between Power Wind and Fusheng Precision
Can any of the company-specific risk be diversified away by investing in both Power Wind and Fusheng Precision 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 Power Wind and Fusheng Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Wind Health and Fusheng Precision Co, you can compare the effects of market volatilities on Power Wind and Fusheng Precision 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 Power Wind with a short position of Fusheng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and Fusheng Precision.
Diversification Opportunities for Power Wind and Fusheng Precision
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and Fusheng is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and Fusheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusheng Precision and Power Wind 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 Power Wind Health are associated (or correlated) with Fusheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusheng Precision has no effect on the direction of Power Wind i.e., Power Wind and Fusheng Precision go up and down completely randomly.
Pair Corralation between Power Wind and Fusheng Precision
Assuming the 90 days trading horizon Power Wind is expected to generate 17.56 times less return on investment than Fusheng Precision. In addition to that, Power Wind is 1.04 times more volatile than Fusheng Precision Co. It trades about 0.0 of its total potential returns per unit of risk. Fusheng Precision Co is currently generating about 0.05 per unit of volatility. If you would invest 21,950 in Fusheng Precision Co on August 26, 2024 and sell it today you would earn a total of 9,250 from holding Fusheng Precision Co or generate 42.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Wind Health vs. Fusheng Precision Co
Performance |
| Timeline |
| Power Wind Health |
| Fusheng Precision |
Power Wind and Fusheng Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Wind and Fusheng Precision
The main advantage of trading using opposite Power Wind and Fusheng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Wind position performs unexpectedly, Fusheng Precision 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 Fusheng Precision will offset losses from the drop in Fusheng Precision's long position.| Power Wind vs. Giant Manufacturing Co | Power Wind vs. Johnson Health Tech | Power Wind vs. Sports Gear Co |
| Fusheng Precision vs. Giant Manufacturing Co | Fusheng Precision vs. Johnson Health Tech | Fusheng Precision vs. Sports Gear Co | Fusheng Precision vs. Power Wind Health |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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