Correlation Between Feutune Light and HHG Capital
Can any of the company-specific risk be diversified away by investing in both Feutune Light and HHG Capital 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 Feutune Light and HHG Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feutune Light Acquisition and HHG Capital, you can compare the effects of market volatilities on Feutune Light and HHG Capital 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 Feutune Light with a short position of HHG Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feutune Light and HHG Capital.
Diversification Opportunities for Feutune Light and HHG Capital
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Feutune and HHG is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Feutune Light Acquisition and HHG Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HHG Capital and Feutune Light 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 Feutune Light Acquisition are associated (or correlated) with HHG Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HHG Capital has no effect on the direction of Feutune Light i.e., Feutune Light and HHG Capital go up and down completely randomly.
Pair Corralation between Feutune Light and HHG Capital
Assuming the 90 days horizon Feutune Light Acquisition is expected to under-perform the HHG Capital. But the stock apears to be less risky and, when comparing its historical volatility, Feutune Light Acquisition is 10.08 times less risky than HHG Capital. The stock trades about -0.25 of its potential returns per unit of risk. The HHG Capital is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1.95 in HHG Capital on September 5, 2024 and sell it today you would lose (1.38) from holding HHG Capital or give up 70.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 16.13% |
| Values | Daily Returns |
Feutune Light Acquisition vs. HHG Capital
Performance |
| Timeline |
| Feutune Light Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| HHG Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Feutune Light and HHG Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feutune Light and HHG Capital
The main advantage of trading using opposite Feutune Light and HHG Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feutune Light position performs unexpectedly, HHG Capital 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 HHG Capital will offset losses from the drop in HHG Capital's long position.The idea behind Feutune Light Acquisition and HHG Capital 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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