Correlation Between INTERCONT HOTELS and Fuyao Glass

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Fuyao Glass 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 INTERCONT HOTELS and Fuyao Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and Fuyao Glass Industry, you can compare the effects of market volatilities on INTERCONT HOTELS and Fuyao Glass 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 INTERCONT HOTELS with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Fuyao Glass.

Diversification Opportunities for INTERCONT HOTELS and Fuyao Glass

0.73
  Correlation Coefficient

Poor diversification

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

Pair Corralation between INTERCONT HOTELS and Fuyao Glass

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 0.9 times more return on investment than Fuyao Glass. However, INTERCONT HOTELS is 1.11 times less risky than Fuyao Glass. It trades about 0.23 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.15 per unit of risk. If you would invest  8,800  in INTERCONT HOTELS on September 4, 2024 and sell it today you would earn a total of  2,900  from holding INTERCONT HOTELS or generate 32.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

INTERCONT HOTELS  vs.  Fuyao Glass Industry

 Performance 
       Timeline  
INTERCONT HOTELS 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.
Fuyao Glass Industry 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fuyao Glass reported solid returns over the last few months and may actually be approaching a breakup point.

INTERCONT HOTELS and Fuyao Glass Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INTERCONT HOTELS and Fuyao Glass

The main advantage of trading using opposite INTERCONT HOTELS and Fuyao Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Fuyao Glass 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 Fuyao Glass will offset losses from the drop in Fuyao Glass' long position.
The idea behind INTERCONT HOTELS and Fuyao Glass Industry 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.
Check out your portfolio center.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas