Correlation Between ICC Holdings and Fuwei Films

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

Diversification Opportunities for ICC Holdings and Fuwei Films

0.47

Correlation Coefficient

ICC Holdings  Fuwei Films

Very weak diversification

The 3 months correlation between ICC and Fuwei is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ICC 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 ICC 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 ICC 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 ICC Holdings i.e., ICC Holdings and Fuwei Films go up and down completely randomly.

Pair Corralation between ICC Holdings and Fuwei Films

If you would invest  1,523  in ICC Holdings on February 14, 2024 and sell it today you would earn a total of  77.00  from holding ICC Holdings or generate 5.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.5%
Values	Daily Returns

ICC Holdings  vs.  Fuwei Films Holdings

ICC Holdings

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ICC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly inconsistent fundamental indicators, ICC Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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.

Pair Trading with ICC Holdings and Fuwei Films

The main advantage of trading using opposite ICC Holdings and Fuwei Films positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICC 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 ICC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.