Correlation Between Forcecon Technology and Yong Shun

Can any of the company-specific risk be diversified away by investing in both Forcecon Technology and Yong Shun 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 Forcecon Technology and Yong Shun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Forcecon Technology Co and Yong Shun Chemical, you can compare the effects of market volatilities on Forcecon Technology and Yong Shun 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 Forcecon Technology with a short position of Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forcecon Technology and Yong Shun.

Diversification Opportunities for Forcecon Technology and Yong Shun

0.59

Correlation Coefficient

Forcecon Technology  Yong Shun

Very weak diversification

The 3 months correlation between Forcecon and Yong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Forcecon Technology Co and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical and Forcecon Technology 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 Forcecon Technology Co are associated (or correlated) with Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of Forcecon Technology i.e., Forcecon Technology and Yong Shun go up and down completely randomly.

Pair Corralation between Forcecon Technology and Yong Shun

Assuming the 90 days trading horizon Forcecon Technology Co is expected to generate 0.92 times more return on investment than Yong Shun. However, Forcecon Technology Co is 1.08 times less risky than Yong Shun. It trades about -0.01 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about -0.03 per unit of risk. If you would invest  16,350  in Forcecon Technology Co on September 15, 2024 and sell it today you would lose (500.00) from holding Forcecon Technology Co or give up 3.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Forcecon Technology Co  vs.  Yong Shun Chemical

Forcecon Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forcecon Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Forcecon Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yong Shun Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yong Shun Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yong Shun is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Forcecon Technology and Yong Shun

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

The idea behind Forcecon Technology Co and Yong Shun Chemical 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.