Correlation Between Fecon Mining and Long Giang
Can any of the company-specific risk be diversified away by investing in both Fecon Mining and Long Giang 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 Fecon Mining and Long Giang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fecon Mining JSC and Long Giang Investment, you can compare the effects of market volatilities on Fecon Mining and Long Giang 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 Fecon Mining with a short position of Long Giang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Long Giang.
Diversification Opportunities for Fecon Mining and Long Giang
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fecon and Long is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining JSC and Long Giang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Giang Investment and Fecon Mining 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 Fecon Mining JSC are associated (or correlated) with Long Giang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Giang Investment has no effect on the direction of Fecon Mining i.e., Fecon Mining and Long Giang go up and down completely randomly.
Pair Corralation between Fecon Mining and Long Giang
Assuming the 90 days trading horizon Fecon Mining JSC is expected to generate 1.73 times more return on investment than Long Giang. However, Fecon Mining is 1.73 times more volatile than Long Giang Investment. It trades about 0.12 of its potential returns per unit of risk. Long Giang Investment is currently generating about 0.06 per unit of risk. If you would invest 310,000 in Fecon Mining JSC on October 11, 2024 and sell it today you would earn a total of 22,000 from holding Fecon Mining JSC or generate 7.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fecon Mining JSC vs. Long Giang Investment
Performance |
Timeline |
Fecon Mining JSC |
Long Giang Investment |
Fecon Mining and Long Giang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fecon Mining and Long Giang
The main advantage of trading using opposite Fecon Mining and Long Giang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fecon Mining position performs unexpectedly, Long Giang 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 Long Giang will offset losses from the drop in Long Giang's long position.Fecon Mining vs. Sao Ta Foods | Fecon Mining vs. Vinhomes JSC | Fecon Mining vs. BIDV Insurance Corp | Fecon Mining vs. Nafoods Group JSC |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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