Correlation Between FIH Mobile and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both FIH Mobile and WESTLAKE CHEMICAL 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 FIH Mobile and WESTLAKE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIH Mobile Limited and WESTLAKE CHEMICAL, you can compare the effects of market volatilities on FIH Mobile and WESTLAKE CHEMICAL 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 FIH Mobile with a short position of WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIH Mobile and WESTLAKE CHEMICAL.
Diversification Opportunities for FIH Mobile and WESTLAKE CHEMICAL
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FIH and WESTLAKE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding FIH Mobile Limited and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL and FIH Mobile 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 FIH Mobile Limited are associated (or correlated) with WESTLAKE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLAKE CHEMICAL has no effect on the direction of FIH Mobile i.e., FIH Mobile and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between FIH Mobile and WESTLAKE CHEMICAL
Assuming the 90 days horizon FIH Mobile Limited is expected to generate 2.6 times more return on investment than WESTLAKE CHEMICAL. However, FIH Mobile is 2.6 times more volatile than WESTLAKE CHEMICAL. It trades about 0.09 of its potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about 0.04 per unit of risk. If you would invest 9.40 in FIH Mobile Limited on September 2, 2024 and sell it today you would earn a total of 0.60 from holding FIH Mobile Limited or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIH Mobile Limited vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| FIH Mobile Limited |
| WESTLAKE CHEMICAL |
FIH Mobile and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIH Mobile and WESTLAKE CHEMICAL
The main advantage of trading using opposite FIH Mobile and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIH Mobile position performs unexpectedly, WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL will offset losses from the drop in WESTLAKE CHEMICAL's long position.| FIH Mobile vs. VIRG NATL BANKSH | FIH Mobile vs. Chesapeake Utilities | FIH Mobile vs. Scientific Games | FIH Mobile vs. JSC Halyk bank |
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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 Stocks Directory module to find actively traded stocks across global markets.
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