Correlation Between Mobileye Global and Fuyao Glass

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

By analyzing existing cross correlation between Mobileye Global Class and Fuyao Glass Industry, you can compare the effects of market volatilities on Mobileye Global 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 Mobileye Global with a short position of Fuyao Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobileye Global and Fuyao Glass.

Diversification Opportunities for Mobileye Global and Fuyao Glass

0.91

Correlation Coefficient

Mobileye Global  Fuyao Glass

Almost no diversification

The 3 months correlation between Mobileye and Fuyao is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class 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 Mobileye Global 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 Mobileye Global Class 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 Mobileye Global i.e., Mobileye Global and Fuyao Glass go up and down completely randomly.

Pair Corralation between Mobileye Global and Fuyao Glass

Given the investment horizon of 90 days Mobileye Global Class is expected to generate 1.46 times more return on investment than Fuyao Glass. However, Mobileye Global is 1.46 times more volatile than Fuyao Glass Industry. It trades about 0.15 of its potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.14 per unit of risk. If you would invest  1,370  in Mobileye Global Class on September 30, 2024 and sell it today you would earn a total of  633.00  from holding Mobileye Global Class or generate 46.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.97%
Values	Daily Returns

Mobileye Global Class  vs.  Fuyao Glass Industry

Mobileye Global Class

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

Fuyao Glass Industry

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Fuyao Glass showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobileye Global and Fuyao Glass

The main advantage of trading using opposite Mobileye Global and Fuyao Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobileye Global 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 Mobileye Global Class 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.