Correlation Between Universal and Fuyao Glass
Can any of the company-specific risk be diversified away by investing in both Universal 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 Universal and Fuyao Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Fuyao Glass Industry, you can compare the effects of market volatilities on Universal 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 Universal with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Fuyao Glass.
Diversification Opportunities for Universal and Fuyao Glass
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Fuyao is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Universal 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 Universal 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 Universal 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 Universal i.e., Universal and Fuyao Glass go up and down completely randomly.
Pair Corralation between Universal and Fuyao Glass
Considering the 90-day investment horizon Universal is expected to generate 3.73 times less return on investment than Fuyao Glass. But when comparing it to its historical volatility, Universal is 2.74 times less risky than Fuyao Glass. It trades about 0.14 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 129.00 in Fuyao Glass Industry on August 30, 2024 and sell it today you would earn a total of 43.00 from holding Fuyao Glass Industry or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Fuyao Glass Industry
Performance |
| Timeline |
| Universal |
| Fuyao Glass Industry |
Universal and Fuyao Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Fuyao Glass
The main advantage of trading using opposite Universal and Fuyao Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal 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.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
| Fuyao Glass vs. Universal | Fuyao Glass vs. Turning Point Brands | Fuyao Glass vs. CVW CleanTech | Fuyao Glass vs. Ultra Clean Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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