Correlation Between Crown Holdings and Fuwei Films

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

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

Diversification Opportunities for Crown Holdings and Fuwei Films

0.23

Correlation Coefficient

Crown Holdings  Fuwei Films

Modest diversification

The 3 months correlation between Crown and Fuwei is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Fuwei Films Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuwei Films Holdings and Crown Holdings 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 Crown Holdings are associated (or correlated) with Fuwei Films. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuwei Films Holdings has no effect on the direction of Crown Holdings i.e., Crown Holdings and Fuwei Films go up and down completely randomly.

Pair Corralation between Crown Holdings and Fuwei Films

If you would invest  848.00  in Fuwei Films Holdings on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Fuwei Films Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.61%
Values	Daily Returns

Crown Holdings  vs.  Fuwei Films Holdings

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Fuwei Films Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuwei Films Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Fuwei Films is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Crown Holdings and Fuwei Films

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

The idea behind Crown Holdings and Fuwei Films Holdings 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.