Correlation Between LB Foster and Shenguan Holdings
Can any of the company-specific risk be diversified away by investing in both LB Foster and Shenguan Holdings 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 Shenguan Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Shenguan Holdings Group, you can compare the effects of market volatilities on LB Foster and Shenguan Holdings 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 Shenguan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Shenguan Holdings.
Diversification Opportunities for LB Foster and Shenguan Holdings
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between FSTR and Shenguan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Shenguan Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenguan Holdings 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 Shenguan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenguan Holdings has no effect on the direction of LB Foster i.e., LB Foster and Shenguan Holdings go up and down completely randomly.
Pair Corralation between LB Foster and Shenguan Holdings
Given the investment horizon of 90 days LB Foster is expected to generate 1.18 times more return on investment than Shenguan Holdings. However, LB Foster is 1.18 times more volatile than Shenguan Holdings Group. It trades about 0.13 of its potential returns per unit of risk. Shenguan Holdings Group is currently generating about -0.1 per unit of risk. If you would invest 1,984 in LB Foster on November 2, 2024 and sell it today you would earn a total of 805.00 from holding LB Foster or generate 40.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Shenguan Holdings Group
Performance |
| Timeline |
| LB Foster |
| Shenguan Holdings |
LB Foster and Shenguan Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Shenguan Holdings
The main advantage of trading using opposite LB Foster and Shenguan Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Shenguan Holdings 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 Shenguan Holdings will offset losses from the drop in Shenguan Holdings' long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Shenguan Holdings vs. Aldel Financial II | Shenguan Holdings vs. Valneva SE ADR | Shenguan Holdings vs. Western Acquisition Ventures | Shenguan Holdings vs. Griffon |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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