Correlation Between Hua Hong and Albemarle Corp

Can any of the company-specific risk be diversified away by investing in both Hua Hong and Albemarle Corp 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 Albemarle Corp 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 Albemarle Corp, you can compare the effects of market volatilities on Hua Hong and Albemarle Corp 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 Albemarle Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Albemarle Corp.

Diversification Opportunities for Hua Hong and Albemarle Corp

-0.22

Correlation Coefficient

Hua Hong  Albemarle Corp

Very good diversification

The 3 months correlation between Hua and Albemarle is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Albemarle Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle Corp 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 Albemarle Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle Corp has no effect on the direction of Hua Hong i.e., Hua Hong and Albemarle Corp go up and down completely randomly.

Pair Corralation between Hua Hong and Albemarle Corp

Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 1.11 times more return on investment than Albemarle Corp. However, Hua Hong is 1.11 times more volatile than Albemarle Corp. It trades about 0.01 of its potential returns per unit of risk. Albemarle Corp is currently generating about -0.05 per unit of risk. If you would invest  344.00  in Hua Hong Semiconductor on October 25, 2024 and sell it today you would lose (48.00) from holding Hua Hong Semiconductor or give up 13.95% of portfolio value over 90 days.

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

Hua Hong Semiconductor  vs.  Albemarle Corp

Hua Hong Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hua Hong Semiconductor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hua Hong reported solid returns over the last few months and may actually be approaching a breakup point.

Albemarle Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Albemarle Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hua Hong and Albemarle Corp

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

The idea behind Hua Hong Semiconductor and Albemarle Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.