Correlation Between Fuyao Glass and NSK
Can any of the company-specific risk be diversified away by investing in both Fuyao Glass and NSK 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 Fuyao Glass and NSK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuyao Glass Industry and NSK Ltd ADR, you can compare the effects of market volatilities on Fuyao Glass and NSK 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 Fuyao Glass with a short position of NSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuyao Glass and NSK.
Diversification Opportunities for Fuyao Glass and NSK
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fuyao and NSK is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fuyao Glass Industry and NSK Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSK Ltd ADR and Fuyao Glass 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 Fuyao Glass Industry are associated (or correlated) with NSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSK Ltd ADR has no effect on the direction of Fuyao Glass i.e., Fuyao Glass and NSK go up and down completely randomly.
Pair Corralation between Fuyao Glass and NSK
Assuming the 90 days horizon Fuyao Glass Industry is expected to generate 1.41 times more return on investment than NSK. However, Fuyao Glass is 1.41 times more volatile than NSK Ltd ADR. It trades about 0.07 of its potential returns per unit of risk. NSK Ltd ADR is currently generating about -0.03 per unit of risk. If you would invest 134.00 in Fuyao Glass Industry on November 2, 2024 and sell it today you would earn a total of 33.00 from holding Fuyao Glass Industry or generate 24.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.2% |
| Values | Daily Returns |
Fuyao Glass Industry vs. NSK Ltd ADR
Performance |
| Timeline |
| Fuyao Glass Industry |
| NSK Ltd ADR |
Fuyao Glass and NSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuyao Glass and NSK
The main advantage of trading using opposite Fuyao Glass and NSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuyao Glass position performs unexpectedly, NSK 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 NSK will offset losses from the drop in NSK's long position.| Fuyao Glass vs. Root Inc | Fuyao Glass vs. Life Insurance | Fuyao Glass vs. Aris Water Solutions | Fuyao Glass vs. Enel Chile SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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