Correlation Between Federal Signal and CHINA CH

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

By analyzing existing cross correlation between Federal Signal and CHINA CH VENT, you can compare the effects of market volatilities on Federal Signal and CHINA CH 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 Federal Signal with a short position of CHINA CH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and CHINA CH.

Diversification Opportunities for Federal Signal and CHINA CH

0.0

Correlation Coefficient

Federal Signal  CHINA CH

Pay attention - limited upside

The 3 months correlation between Federal and CHINA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and CHINA CH VENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA CH VENT and Federal Signal 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 Federal Signal are associated (or correlated) with CHINA CH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA CH VENT has no effect on the direction of Federal Signal i.e., Federal Signal and CHINA CH go up and down completely randomly.

Pair Corralation between Federal Signal and CHINA CH

If you would invest  0.00  in CHINA CH VENT on March 6, 2024 and sell it today you would earn a total of  0.00  from holding CHINA CH VENT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Federal Signal  vs.  CHINA CH VENT

Federal Signal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federal Signal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Federal Signal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CHINA CH VENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA CH VENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CHINA CH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Federal Signal and CHINA CH

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

The idea behind Federal Signal and CHINA CH VENT 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.