Correlation Between Hua Hong and Wynn Macau

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

By analyzing existing cross correlation between Hua Hong Semiconductor and Wynn Macau Limited, you can compare the effects of market volatilities on Hua Hong and Wynn Macau 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 Hua Hong with a short position of Wynn Macau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Wynn Macau.

Diversification Opportunities for Hua Hong and Wynn Macau

0.36

Correlation Coefficient

Hua Hong  Wynn Macau

Weak diversification

The 3 months correlation between Hua and Wynn is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Wynn Macau Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Macau Limited and Hua Hong 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 Hua Hong Semiconductor are associated (or correlated) with Wynn Macau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Macau Limited has no effect on the direction of Hua Hong i.e., Hua Hong and Wynn Macau go up and down completely randomly.

Pair Corralation between Hua Hong and Wynn Macau

Assuming the 90 days horizon Hua Hong Semiconductor is expected to under-perform the Wynn Macau. In addition to that, Hua Hong is 1.5 times more volatile than Wynn Macau Limited. It trades about -0.08 of its total potential returns per unit of risk. Wynn Macau Limited is currently generating about -0.06 per unit of volatility. If you would invest  73.00  in Wynn Macau Limited on October 8, 2024 and sell it today you would lose (7.00) from holding Wynn Macau Limited or give up 9.59% of portfolio value over 90 days.

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

Hua Hong Semiconductor  vs.  Wynn Macau Limited

Hua Hong Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wynn Macau Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hua Hong and Wynn Macau

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

The idea behind Hua Hong Semiconductor and Wynn Macau 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.