Correlation Between Long Giang and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both Long Giang and Fecon Mining 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 Long Giang and Fecon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Giang Investment and Fecon Mining JSC, you can compare the effects of market volatilities on Long Giang and Fecon Mining 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 Long Giang with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Giang and Fecon Mining.
Diversification Opportunities for Long Giang and Fecon Mining
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Long and Fecon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Long Giang Investment and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and Long Giang 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 Long Giang Investment are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Long Giang i.e., Long Giang and Fecon Mining go up and down completely randomly.
Pair Corralation between Long Giang and Fecon Mining
Assuming the 90 days trading horizon Long Giang is expected to generate 3.39 times less return on investment than Fecon Mining. But when comparing it to its historical volatility, Long Giang Investment is 1.73 times less risky than Fecon Mining. It trades about 0.06 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 310,000 in Fecon Mining JSC on October 11, 2024 and sell it today you would earn a total of 22,000 from holding Fecon Mining JSC or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Giang Investment vs. Fecon Mining JSC
Performance |
| Timeline |
| Long Giang Investment |
| Fecon Mining JSC |
Long Giang and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Giang and Fecon Mining
The main advantage of trading using opposite Long Giang and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Giang position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining's long position.| Long Giang vs. Fecon Mining JSC | Long Giang vs. Investment and Industrial | Long Giang vs. Post and Telecommunications | Long Giang vs. Ducgiang Chemicals Detergent |
| Fecon Mining vs. Sao Ta Foods | Fecon Mining vs. Vinhomes JSC | Fecon Mining vs. BIDV Insurance Corp | Fecon Mining vs. Nafoods Group JSC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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