Correlation Between Hunan Investment and Invengo Information

Can any of the company-specific risk be diversified away by investing in both Hunan Investment and Invengo Information 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 Hunan Investment and Invengo Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hunan Investment Group and Invengo Information Technology, you can compare the effects of market volatilities on Hunan Investment and Invengo Information 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 Hunan Investment with a short position of Invengo Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunan Investment and Invengo Information.

Diversification Opportunities for Hunan Investment and Invengo Information

0.76

Correlation Coefficient

Hunan Investment  Invengo Information

Poor diversification

The 3 months correlation between Hunan and Invengo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hunan Investment Group and Invengo Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invengo Information and Hunan Investment 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 Hunan Investment Group are associated (or correlated) with Invengo Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invengo Information has no effect on the direction of Hunan Investment i.e., Hunan Investment and Invengo Information go up and down completely randomly.

Pair Corralation between Hunan Investment and Invengo Information

Assuming the 90 days trading horizon Hunan Investment is expected to generate 1.75 times less return on investment than Invengo Information. But when comparing it to its historical volatility, Hunan Investment Group is 1.25 times less risky than Invengo Information. It trades about 0.01 of its potential returns per unit of risk. Invengo Information Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Invengo Information Technology on October 11, 2024 and sell it today you would lose (37.00) from holding Invengo Information Technology or give up 6.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Hunan Investment Group  vs.  Invengo Information Technology

Hunan Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hunan Investment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invengo Information

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invengo Information Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Invengo Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hunan Investment and Invengo Information

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

The idea behind Hunan Investment Group and Invengo Information Technology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..