Correlation Between Fortinet and Jiangsu Expressway

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

By analyzing existing cross correlation between Fortinet and Jiangsu Expressway, you can compare the effects of market volatilities on Fortinet and Jiangsu Expressway 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 Fortinet with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Jiangsu Expressway.

Diversification Opportunities for Fortinet and Jiangsu Expressway

-0.01

Correlation Coefficient

Fortinet  Jiangsu Expressway

Good diversification

The 3 months correlation between Fortinet and Jiangsu is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Fortinet 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 Fortinet are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Fortinet i.e., Fortinet and Jiangsu Expressway go up and down completely randomly.

Pair Corralation between Fortinet and Jiangsu Expressway

Given the investment horizon of 90 days Fortinet is expected to generate 0.75 times more return on investment than Jiangsu Expressway. However, Fortinet is 1.33 times less risky than Jiangsu Expressway. It trades about 0.18 of its potential returns per unit of risk. Jiangsu Expressway is currently generating about 0.0 per unit of risk. If you would invest  7,580  in Fortinet on September 5, 2024 and sell it today you would earn a total of  1,949  from holding Fortinet or generate 25.71% return on investment over 90 days.

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

Fortinet  vs.  Jiangsu Expressway

Fortinet

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fortinet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Expressway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiangsu Expressway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jiangsu Expressway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortinet and Jiangsu Expressway

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

The idea behind Fortinet and Jiangsu Expressway 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.