Correlation Between Fuse Science and Wah Fu

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

By analyzing existing cross correlation between Fuse Science and Wah Fu Education, you can compare the effects of market volatilities on Fuse Science and Wah Fu 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 Fuse Science with a short position of Wah Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuse Science and Wah Fu.

Diversification Opportunities for Fuse Science and Wah Fu

0.06

Correlation Coefficient

Fuse Science  Wah Fu

Significant diversification

The 3 months correlation between Fuse and Wah is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fuse Science and Wah Fu Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Fu Education and Fuse Science 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 Fuse Science are associated (or correlated) with Wah Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Fu Education has no effect on the direction of Fuse Science i.e., Fuse Science and Wah Fu go up and down completely randomly.

Pair Corralation between Fuse Science and Wah Fu

Given the investment horizon of 90 days Fuse Science is expected to generate 6.89 times more return on investment than Wah Fu. However, Fuse Science is 6.89 times more volatile than Wah Fu Education. It trades about 0.15 of its potential returns per unit of risk. Wah Fu Education is currently generating about 0.04 per unit of risk. If you would invest  0.18  in Fuse Science on April 25, 2025 and sell it today you would earn a total of  0.26  from holding Fuse Science or generate 144.44% return on investment over 90 days.

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

Fuse Science  vs.  Wah Fu Education

Fuse Science

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuse Science are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fuse Science reported solid returns over the last few months and may actually be approaching a breakup point.

Wah Fu Education

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wah Fu Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Wah Fu may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fuse Science and Wah Fu

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

The idea behind Fuse Science and Wah Fu Education 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.