Correlation Between Fuwei Films and AptarGroup

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

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

Diversification Opportunities for Fuwei Films and AptarGroup

0.05

Correlation Coefficient

Fuwei Films  AptarGroup

Significant diversification

The 3 months correlation between Fuwei and AptarGroup is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fuwei Films Holdings and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Fuwei Films 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 Fuwei Films Holdings are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Fuwei Films i.e., Fuwei Films and AptarGroup go up and down completely randomly.

Pair Corralation between Fuwei Films and AptarGroup

If you would invest  12,492  in AptarGroup on January 17, 2024 and sell it today you would earn a total of  1,328  from holding AptarGroup or generate 10.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.81%
Values	Daily Returns

Fuwei Films Holdings  vs.  AptarGroup

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

AptarGroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AptarGroup are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, AptarGroup may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Fuwei Films and AptarGroup

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

The idea behind Fuwei Films Holdings and AptarGroup 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.