Correlation Between LB Foster and Ihuman
Can any of the company-specific risk be diversified away by investing in both LB Foster and Ihuman 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 LB Foster and Ihuman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Ihuman Inc, you can compare the effects of market volatilities on LB Foster and Ihuman 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 LB Foster with a short position of Ihuman. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Ihuman.
Diversification Opportunities for LB Foster and Ihuman
Significant diversification
The 3 months correlation between FSTR and Ihuman is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc and LB Foster 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 LB Foster are associated (or correlated) with Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of LB Foster i.e., LB Foster and Ihuman go up and down completely randomly.
Pair Corralation between LB Foster and Ihuman
Given the investment horizon of 90 days LB Foster is expected to under-perform the Ihuman. In addition to that, LB Foster is 1.18 times more volatile than Ihuman Inc. It trades about -0.11 of its total potential returns per unit of risk. Ihuman Inc is currently generating about 0.38 per unit of volatility. If you would invest 163.00 in Ihuman Inc on November 29, 2024 and sell it today you would earn a total of 24.00 from holding Ihuman Inc or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Ihuman Inc
Performance |
| Timeline |
| LB Foster |
| Ihuman Inc |
LB Foster and Ihuman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Ihuman
The main advantage of trading using opposite LB Foster and Ihuman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Ihuman 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 Ihuman will offset losses from the drop in Ihuman's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Ihuman vs. Boqii Holding Limited | Ihuman vs. Lixiang Education Holding | Ihuman vs. Huize Holding | Ihuman vs. Kuke Music Holding |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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