Correlation Between FIBRA Storage and NetEase

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Can any of the company-specific risk be diversified away by investing in both FIBRA Storage and NetEase 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 FIBRA Storage and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIBRA Storage and NetEase, you can compare the effects of market volatilities on FIBRA Storage and NetEase 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 FIBRA Storage with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIBRA Storage and NetEase.

Diversification Opportunities for FIBRA Storage and NetEase

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between FIBRA and NetEase is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and FIBRA Storage 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 FIBRA Storage are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of FIBRA Storage i.e., FIBRA Storage and NetEase go up and down completely randomly.

Pair Corralation between FIBRA Storage and NetEase

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 0.41 times more return on investment than NetEase. However, FIBRA Storage is 2.47 times less risky than NetEase. It trades about 0.04 of its potential returns per unit of risk. NetEase is currently generating about 0.0 per unit of risk. If you would invest  1,631  in FIBRA Storage on September 4, 2024 and sell it today you would earn a total of  151.00  from holding FIBRA Storage or generate 9.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.59%
ValuesDaily Returns

FIBRA Storage  vs.  NetEase

 Performance 
       Timeline  
FIBRA Storage 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.
NetEase 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, NetEase may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FIBRA Storage and NetEase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FIBRA Storage and NetEase

The main advantage of trading using opposite FIBRA Storage and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIBRA Storage position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.
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The idea behind FIBRA Storage and NetEase pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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