Correlation Between Henan Shuanghui and Shandong Homey

Can any of the company-specific risk be diversified away by investing in both Henan Shuanghui and Shandong Homey 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 Henan Shuanghui and Shandong Homey into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Henan Shuanghui Investment and Shandong Homey Aquatic, you can compare the effects of market volatilities on Henan Shuanghui and Shandong Homey 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 Henan Shuanghui with a short position of Shandong Homey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henan Shuanghui and Shandong Homey.

Diversification Opportunities for Henan Shuanghui and Shandong Homey

0.05

Correlation Coefficient

Henan Shuanghui  Shandong Homey

Significant diversification

The 3 months correlation between Henan and Shandong is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Henan Shuanghui Investment and Shandong Homey Aquatic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Homey Aquatic and Henan Shuanghui 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 Henan Shuanghui Investment are associated (or correlated) with Shandong Homey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Homey Aquatic has no effect on the direction of Henan Shuanghui i.e., Henan Shuanghui and Shandong Homey go up and down completely randomly.

Pair Corralation between Henan Shuanghui and Shandong Homey

Assuming the 90 days trading horizon Henan Shuanghui Investment is expected to generate 0.39 times more return on investment than Shandong Homey. However, Henan Shuanghui Investment is 2.56 times less risky than Shandong Homey. It trades about 0.11 of its potential returns per unit of risk. Shandong Homey Aquatic is currently generating about -0.09 per unit of risk. If you would invest  2,496  in Henan Shuanghui Investment on December 1, 2024 and sell it today you would earn a total of  192.00  from holding Henan Shuanghui Investment or generate 7.69% return on investment over 90 days.

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

Henan Shuanghui Investment  vs.  Shandong Homey Aquatic

Henan Shuanghui Inve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Henan Shuanghui Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Henan Shuanghui may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shandong Homey Aquatic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Homey Aquatic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Henan Shuanghui and Shandong Homey

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

The idea behind Henan Shuanghui Investment and Shandong Homey Aquatic 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.