Correlation Between Easyhome New and Hua Xia

Can any of the company-specific risk be diversified away by investing in both Easyhome New and Hua Xia 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 Easyhome New and Hua Xia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Easyhome New Retail and Hua Xia Bank, you can compare the effects of market volatilities on Easyhome New and Hua Xia 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 Easyhome New with a short position of Hua Xia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easyhome New and Hua Xia.

Diversification Opportunities for Easyhome New and Hua Xia

-0.09

Correlation Coefficient

Easyhome New  Hua Xia

Good diversification

The 3 months correlation between Easyhome and Hua is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Easyhome New Retail and Hua Xia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Xia Bank and Easyhome New 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 Easyhome New Retail are associated (or correlated) with Hua Xia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Xia Bank has no effect on the direction of Easyhome New i.e., Easyhome New and Hua Xia go up and down completely randomly.

Pair Corralation between Easyhome New and Hua Xia

Assuming the 90 days trading horizon Easyhome New Retail is expected to generate 11.39 times more return on investment than Hua Xia. However, Easyhome New is 11.39 times more volatile than Hua Xia Bank. It trades about 0.27 of its potential returns per unit of risk. Hua Xia Bank is currently generating about -0.18 per unit of risk. If you would invest  338.00  in Easyhome New Retail on December 4, 2024 and sell it today you would earn a total of  117.00  from holding Easyhome New Retail or generate 34.62% return on investment over 90 days.

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

Easyhome New Retail  vs.  Hua Xia Bank

Easyhome New Retail

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easyhome New Retail are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Easyhome New sustained solid returns over the last few months and may actually be approaching a breakup point.

Hua Xia Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hua Xia Bank 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 Easyhome New and Hua Xia

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

The idea behind Easyhome New Retail and Hua Xia Bank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.