Correlation Between FSPG Hi and Zhejiang JIULI

Can any of the company-specific risk be diversified away by investing in both FSPG Hi and Zhejiang JIULI 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 FSPG Hi and Zhejiang JIULI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FSPG Hi Tech Co and Zhejiang JIULI Hi tech, you can compare the effects of market volatilities on FSPG Hi and Zhejiang JIULI 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 FSPG Hi with a short position of Zhejiang JIULI. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSPG Hi and Zhejiang JIULI.

Diversification Opportunities for FSPG Hi and Zhejiang JIULI

0.73

Correlation Coefficient

FSPG Hi  Zhejiang JIULI

Poor diversification

The 3 months correlation between FSPG and Zhejiang is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FSPG Hi Tech Co and Zhejiang JIULI Hi tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang JIULI Hi and FSPG Hi 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 FSPG Hi Tech Co are associated (or correlated) with Zhejiang JIULI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang JIULI Hi has no effect on the direction of FSPG Hi i.e., FSPG Hi and Zhejiang JIULI go up and down completely randomly.

Pair Corralation between FSPG Hi and Zhejiang JIULI

Assuming the 90 days trading horizon FSPG Hi Tech Co is expected to generate 1.91 times more return on investment than Zhejiang JIULI. However, FSPG Hi is 1.91 times more volatile than Zhejiang JIULI Hi tech. It trades about 0.25 of its potential returns per unit of risk. Zhejiang JIULI Hi tech is currently generating about 0.19 per unit of risk. If you would invest  378.00  in FSPG Hi Tech Co on September 3, 2024 and sell it today you would earn a total of  322.00  from holding FSPG Hi Tech Co or generate 85.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

FSPG Hi Tech Co  vs.  Zhejiang JIULI Hi tech

FSPG Hi Tech

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FSPG Hi Tech Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FSPG Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang JIULI Hi

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang JIULI Hi tech are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang JIULI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FSPG Hi and Zhejiang JIULI

The main advantage of trading using opposite FSPG Hi and Zhejiang JIULI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSPG Hi position performs unexpectedly, Zhejiang JIULI 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 Zhejiang JIULI will offset losses from the drop in Zhejiang JIULI's long position.

The idea behind FSPG Hi Tech Co and Zhejiang JIULI Hi tech 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.