Correlation Between Fuzhou Rockchip and Tongling Nonferrous

Can any of the company-specific risk be diversified away by investing in both Fuzhou Rockchip and Tongling Nonferrous 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 Fuzhou Rockchip and Tongling Nonferrous into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fuzhou Rockchip Electronics and Tongling Nonferrous Metals, you can compare the effects of market volatilities on Fuzhou Rockchip and Tongling Nonferrous 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 Fuzhou Rockchip with a short position of Tongling Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuzhou Rockchip and Tongling Nonferrous.

Diversification Opportunities for Fuzhou Rockchip and Tongling Nonferrous

0.78

Correlation Coefficient

Fuzhou Rockchip  Tongling Nonferrous

Poor diversification

The 3 months correlation between Fuzhou and Tongling is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fuzhou Rockchip Electronics and Tongling Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongling Nonferrous and Fuzhou Rockchip 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 Fuzhou Rockchip Electronics are associated (or correlated) with Tongling Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongling Nonferrous has no effect on the direction of Fuzhou Rockchip i.e., Fuzhou Rockchip and Tongling Nonferrous go up and down completely randomly.

Pair Corralation between Fuzhou Rockchip and Tongling Nonferrous

Assuming the 90 days trading horizon Fuzhou Rockchip Electronics is expected to under-perform the Tongling Nonferrous. In addition to that, Fuzhou Rockchip is 1.31 times more volatile than Tongling Nonferrous Metals. It trades about -0.04 of its total potential returns per unit of risk. Tongling Nonferrous Metals is currently generating about -0.05 per unit of volatility. If you would invest  355.00  in Tongling Nonferrous Metals on September 5, 2024 and sell it today you would lose (8.00) from holding Tongling Nonferrous Metals or give up 2.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Fuzhou Rockchip Electronics  vs.  Tongling Nonferrous Metals

Fuzhou Rockchip Elec

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fuzhou Rockchip Electronics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fuzhou Rockchip sustained solid returns over the last few months and may actually be approaching a breakup point.

Tongling Nonferrous

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tongling Nonferrous Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tongling Nonferrous sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fuzhou Rockchip and Tongling Nonferrous

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

The idea behind Fuzhou Rockchip Electronics and Tongling Nonferrous Metals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.