Correlation Between Motorola Solutions and FIH Mobile
Can any of the company-specific risk be diversified away by investing in both Motorola Solutions and FIH Mobile 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 Motorola Solutions and FIH Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motorola Solutions and FIH Mobile Limited, you can compare the effects of market volatilities on Motorola Solutions and FIH Mobile 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 Motorola Solutions with a short position of FIH Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorola Solutions and FIH Mobile.
Diversification Opportunities for Motorola Solutions and FIH Mobile
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Motorola and FIH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Motorola Solutions and FIH Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIH Mobile Limited and Motorola Solutions 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 Motorola Solutions are associated (or correlated) with FIH Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIH Mobile Limited has no effect on the direction of Motorola Solutions i.e., Motorola Solutions and FIH Mobile go up and down completely randomly.
Pair Corralation between Motorola Solutions and FIH Mobile
Assuming the 90 days trading horizon Motorola Solutions is expected to generate 0.33 times more return on investment than FIH Mobile. However, Motorola Solutions is 3.0 times less risky than FIH Mobile. It trades about 0.23 of its potential returns per unit of risk. FIH Mobile Limited is currently generating about -0.05 per unit of risk. If you would invest 40,060 in Motorola Solutions on August 30, 2024 and sell it today you would earn a total of 7,220 from holding Motorola Solutions or generate 18.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Motorola Solutions vs. FIH Mobile Limited
Performance |
| Timeline |
| Motorola Solutions |
| FIH Mobile Limited |
Motorola Solutions and FIH Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motorola Solutions and FIH Mobile
The main advantage of trading using opposite Motorola Solutions and FIH Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorola Solutions position performs unexpectedly, FIH Mobile 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 FIH Mobile will offset losses from the drop in FIH Mobile's long position.| Motorola Solutions vs. Cisco Systems | Motorola Solutions vs. Superior Plus Corp | Motorola Solutions vs. SIVERS SEMICONDUCTORS AB | Motorola Solutions vs. Talanx AG |
| FIH Mobile vs. WESTLAKE CHEMICAL | FIH Mobile vs. MARKET VECTR RETAIL | FIH Mobile vs. JIAHUA STORES | FIH Mobile vs. Westlake Chemical |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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