Correlation Between Magna International and Fuyao Glass
Can any of the company-specific risk be diversified away by investing in both Magna International and Fuyao Glass 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 Magna International and Fuyao Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Fuyao Glass Industry, you can compare the effects of market volatilities on Magna International and Fuyao Glass 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 Magna International with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Fuyao Glass.
Diversification Opportunities for Magna International and Fuyao Glass
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magna and Fuyao is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry and Magna International 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 Magna International are associated (or correlated) with Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of Magna International i.e., Magna International and Fuyao Glass go up and down completely randomly.
Pair Corralation between Magna International and Fuyao Glass
Assuming the 90 days horizon Magna International is expected to generate 1.59 times less return on investment than Fuyao Glass. In addition to that, Magna International is 1.07 times more volatile than Fuyao Glass Industry. It trades about 0.09 of its total potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.15 per unit of volatility. If you would invest 510.00 in Fuyao Glass Industry on September 2, 2024 and sell it today you would earn a total of 115.00 from holding Fuyao Glass Industry or generate 22.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Fuyao Glass Industry
Performance |
| Timeline |
| Magna International |
| Fuyao Glass Industry |
Magna International and Fuyao Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Fuyao Glass
The main advantage of trading using opposite Magna International and Fuyao Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Fuyao Glass 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 Fuyao Glass will offset losses from the drop in Fuyao Glass' long position.| Magna International vs. PT Astra International | Magna International vs. Superior Plus Corp | Magna International vs. NMI Holdings | Magna International vs. Origin Agritech |
| Fuyao Glass vs. PT Astra International | Fuyao Glass vs. Superior Plus Corp | Fuyao Glass vs. NMI Holdings | Fuyao Glass vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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