Correlation Between Haima Automobile and China Mobile

Can any of the company-specific risk be diversified away by investing in both Haima Automobile and China Mobile 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 Haima Automobile and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haima Automobile Group and China Mobile Limited, you can compare the effects of market volatilities on Haima Automobile and China Mobile 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 Haima Automobile with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haima Automobile and China Mobile.

Diversification Opportunities for Haima Automobile and China Mobile

0.12

Correlation Coefficient

Haima Automobile  China Mobile

Average diversification

The 3 months correlation between Haima and China is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Haima Automobile Group and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited and Haima Automobile 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 Haima Automobile Group are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of Haima Automobile i.e., Haima Automobile and China Mobile go up and down completely randomly.

Pair Corralation between Haima Automobile and China Mobile

Assuming the 90 days trading horizon Haima Automobile Group is expected to generate 1.86 times more return on investment than China Mobile. However, Haima Automobile is 1.86 times more volatile than China Mobile Limited. It trades about -0.03 of its potential returns per unit of risk. China Mobile Limited is currently generating about -0.1 per unit of risk. If you would invest  444.00  in Haima Automobile Group on December 24, 2024 and sell it today you would lose (22.00) from holding Haima Automobile Group or give up 4.95% of portfolio value over 90 days.

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

Haima Automobile Group  vs.  China Mobile Limited

Haima Automobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haima Automobile Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Haima Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Mobile Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Mobile Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Haima Automobile and China Mobile

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

The idea behind Haima Automobile Group and China Mobile Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.