Correlation Between Fuwei Films and International Paper
Can any of the company-specific risk be diversified away by investing in both Fuwei Films and International Paper 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 International Paper 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 International Paper, you can compare the effects of market volatilities on Fuwei Films and International Paper 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 International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuwei Films and International Paper.
Diversification Opportunities for Fuwei Films and International Paper
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fuwei and International is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fuwei Films Holdings and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper 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 International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of Fuwei Films i.e., Fuwei Films and International Paper go up and down completely randomly.
Pair Corralation between Fuwei Films and International Paper
If you would invest 848.00 in Fuwei Films Holdings on January 19, 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 | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Fuwei Films Holdings vs. International Paper
Performance |
| Timeline |
| Fuwei Films Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International Paper |
Fuwei Films and International Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuwei Films and International Paper
The main advantage of trading using opposite Fuwei Films and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuwei Films position performs unexpectedly, International Paper 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 International Paper will offset losses from the drop in International Paper's long position.| Fuwei Films vs. Peoples Educational Holdings | Fuwei Films vs. Merit Medical Systems | Fuwei Films vs. Lincoln Educational Services | Fuwei Films vs. Udemy Inc |
| International Paper vs. WestRock Co | International Paper vs. Sealed Air | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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