Correlation Between BenQ Materials and Fu Burg

Can any of the company-specific risk be diversified away by investing in both BenQ Materials and Fu Burg 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 BenQ Materials and Fu Burg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BenQ Materials Corp and Fu Burg Industrial, you can compare the effects of market volatilities on BenQ Materials and Fu Burg 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 BenQ Materials with a short position of Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Fu Burg.

Diversification Opportunities for BenQ Materials and Fu Burg

0.38

Correlation Coefficient

BenQ Materials  Fu Burg

Weak diversification

The 3 months correlation between BenQ and 8929 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of BenQ Materials i.e., BenQ Materials and Fu Burg go up and down completely randomly.

Pair Corralation between BenQ Materials and Fu Burg

Assuming the 90 days trading horizon BenQ Materials Corp is expected to under-perform the Fu Burg. But the stock apears to be less risky and, when comparing its historical volatility, BenQ Materials Corp is 3.16 times less risky than Fu Burg. The stock trades about -0.3 of its potential returns per unit of risk. The Fu Burg Industrial is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,840  in Fu Burg Industrial on September 24, 2024 and sell it today you would lose (195.00) from holding Fu Burg Industrial or give up 6.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BenQ Materials Corp  vs.  Fu Burg Industrial

BenQ Materials Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BenQ Materials Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BenQ Materials is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fu Burg Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fu Burg Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fu Burg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BenQ Materials and Fu Burg

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

The idea behind BenQ Materials Corp and Fu Burg Industrial 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.