Correlation Between Continental Aktiengesellscha and Fuyao Glass
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and Fuyao Glass 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 Continental Aktiengesellscha and Fuyao Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and Fuyao Glass Industry, you can compare the effects of market volatilities on Continental Aktiengesellscha and Fuyao Glass 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 Continental Aktiengesellscha with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and Fuyao Glass.
Diversification Opportunities for Continental Aktiengesellscha and Fuyao Glass
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Continental and Fuyao is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry and Continental Aktiengesellscha 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 Continental Aktiengesellschaft are associated (or correlated) with Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Fuyao Glass go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and Fuyao Glass
Assuming the 90 days horizon Continental Aktiengesellscha is expected to generate 6.01 times less return on investment than Fuyao Glass. But when comparing it to its historical volatility, Continental Aktiengesellschaft is 1.7 times less risky than Fuyao Glass. It trades about 0.02 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 172.00 in Fuyao Glass Industry on September 23, 2024 and sell it today you would earn a total of 483.00 from holding Fuyao Glass Industry or generate 280.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. Fuyao Glass Industry
Performance |
| Timeline |
| Continental Aktiengesellscha |
| Fuyao Glass Industry |
Continental Aktiengesellscha and Fuyao Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and Fuyao Glass
The main advantage of trading using opposite Continental Aktiengesellscha and Fuyao Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, Fuyao Glass 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 Fuyao Glass will offset losses from the drop in Fuyao Glass' long position.| Continental Aktiengesellscha vs. Dno ASA | Continental Aktiengesellscha vs. DENSO P ADR | Continental Aktiengesellscha vs. Aptiv PLC | Continental Aktiengesellscha vs. PT Astra International |
| Fuyao Glass vs. Dno ASA | Fuyao Glass vs. DENSO P ADR | Fuyao Glass vs. Aptiv PLC | Fuyao Glass vs. PT Astra International |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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