Correlation Between Fuwei Films and Crown Holdings

Can any of the company-specific risk be diversified away by investing in both Fuwei Films and Crown Holdings 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 Crown Holdings 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 Crown Holdings, you can compare the effects of market volatilities on Fuwei Films and Crown Holdings 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 Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuwei Films and Crown Holdings.

Diversification Opportunities for Fuwei Films and Crown Holdings

0.2

Correlation Coefficient

Fuwei Films  Crown Holdings

Modest diversification

The 3 months correlation between Fuwei and Crown is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fuwei Films Holdings and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings 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 Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Fuwei Films i.e., Fuwei Films and Crown Holdings go up and down completely randomly.

Pair Corralation between Fuwei Films and Crown Holdings

If you would invest  7,775  in Crown Holdings on January 21, 2024 and sell it today you would lose (8.00) from holding Crown Holdings or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Fuwei Films Holdings  vs.  Crown Holdings

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

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 uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Fuwei Films and Crown Holdings

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

The idea behind Fuwei Films Holdings and Crown 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.